* 2012-2013 deficit could be C$2.3 bln-C$3 bln
* Revenues currently C$1.4 bln lower than expected
* Heavy crude discounts have been around $30 under WTI
By Jeffrey Jones
CALGARY, Alberta, Nov 28 Deep price discounts on
the crude wrung from Alberta's oil sands are taking their toll
on the western Canadian province's finances, the government said
on Wednesday, as it warned that its deficit could still be more
than triple its initial projection.
In a second-quarter budget update, the Conservative
government of Canada's biggest energy-producing province said it
expects its 2012-2013 deficit will be between C$2.3 billion and
C$3 billion ($2.3 billion and $3 billion), with revenues for the
first six months tracking C$1.4 billion below expectations.
It originally planned for a deficit of C$886 million, but
realized by the end of the first quarter that the likely
shortfall was widening.
Finance Minister Doug Horner blamed a series of factors,
including global economic problems, the high value of the
Canadian dollar versus the U.S. dollar and lower-than-expected
land lease sales to energy companies.
But he singled out unusually wide differentials between the
price of U.S. benchmark light oil and Canadian heavy oil as the
most painful factor.
Western Canada Select heavy blend, a widely quoted grade of
oil, has sold recently for around $30 a barrel under West Texas
Intermediate, up from around $13 under WTI a year ago.
Meanwhile, WTI is weaker than it was a year ago, a double
whammy for Canadian oil producers.
The discount is the result of tight pipeline capacity to the
U.S. Midwest and scant access to other markets, such as the U.S.
Gulf Coast and Asia, given delays in projects that would open up
the new regions for Canadian supply.
"The biggest factor affecting our resource revenue right now
is the lack of market access for our oil," Horner said.
"We have one customer and one means to ship our product to
them. On the other hand, our customer has many different
suppliers to choose from. This is not a good situation to be in
and it's costing us dearly."
Alberta is an enthusiastic proponent of such contentious
proposals as TransCanada Corp's C$5.3 billion Keystone
XL pipeline to the southern United States and Enbridge Inc's
C$6 billion Northern Gateway line to the Pacific Coast.
Meanwhile, the government said its expenses for the first
six months of the year were C$293 million higher than expected
due to the need to fund relief from forest fires and severe