Millions at stake in oilsands dispute

Up to $100 million could be at stake this year in a dispute between the Alberta government and oilsands giants Suncor and Syncrude, according to auditor general Fred Dunn.

In his semi-annual report released Friday, Dunn said there's an ongoing tussle regarding whether the two long-lived oilsands operators can use a lower price for bitumen in their royalty calculations.

If the government loses having royalties calculated at a higher price, it will be out $100 million this year--and possibly similar amounts in upcoming years.

"That number is a very significant amount," Dunn said. "What we're trying to do through this disclosure is encourage the department and the operators to work this out."

Dunn said it's disheartening that the government negotiated new, special royalty deals with Syncrude and Suncor just last year, and already there's debate and "uncertainty on either side as to what is expected or required."

He added that a dispute resolution process is available, but it would be costly for all involved.

No officials from Suncor were made available to comment Friday. From Imperial Oil Ltd.--a 25 per cent owner of Syncrude--spokesman Pius Rolheiser said the company needs time to analyze Dunn's report before commenting.

In Edmonton, Alberta Energy spokesman Jerry Bellikka said the government isn't going to budge from its position.

The government is not asking anything more of Suncor or Syncrude than other producers, Bellikka added.

"It's the same price that everyone else uses," he said.

In his report, the auditor general also raised concerns about errors in the Energy Department's financial statements, saying they seldom occur -- but are "individually material," and in the past three years have ranged from $60 million to $237 million.

InexaminingAlbertaEnergy's books, Dunn also raised concerns that natural gas producers could be surprised with having to pay back as much as $1.1 billion, due to changes in the royalty regime.

kcryderman@theherald. canwest.com