Royalties

Companies recovering hydrocarbons from Alberta Crown Rights must pay royalties to the Province.

Royalties are determined by either the Non-Project Well License Royalty Regime (production-based royalty) or, if royalty approvals have been completed, under the Oil Sands Royalty Regime (share of profit royalty).

Bitumen may also be substituted for cash royalty payments under the Bitumen Royalty-in-Kind (BRIK) program.

Transport

Oil and oil products are most efficiently transported by pipeline throughout North America.

Pipelines also deliver oil to ports for transport by tanker ship to foreign markets, especially Asia.

Pipelines in Canada are regulated based on jurisdiction. If a pipeline crosses a provincial or international border, it is regulated by the National Energy Boardexternal link icon (NEB). Pipelines that operate entirely within a province are regulated by the regulator in that province.

Multiple products can be transported by a single pipeline simultaneously, resulting in an extremely efficient system.

Refining
Most North American refineries receive either diluted bitumen or synthetic crude oil (SCO) via pipeline from Alberta.

Refineries transform upgraded diluted bitumen or SCO into usable petroleum products such as gasoline, diesel, jet fuel, kerosene, butane and other hydrocarbons.

The cost to build a new refinery capable of producing 175,000 to 200,000 barrels per day is in the billions of dollars.

Sale
In 2016, about 42% of crude bitumen production was sent for upgrading into synthetic crude oil to four Alberta upgraders. Most of blended bitumen, upgraded bitumen and crude oil is sold to refineries in U.S. Midwest, Rocky Mountains and Gulf Coast, British Columbia, Ontario and Quebec.