Benefits To The Canadian Economy From The Wolf Lake Project
Authors: Czaja L. , Kirkegaard M. , Haessel W. , Douglas G. 
Published: March 2010

Introduction
Today's Alberta oil sands projects have proceeded as a result of the combined efforts of industry and government. Steps have been taken to minimize the technological and economic risks associated with oil sands development. The current projects are smaller, involve less capital, and have much shorter lags between project initiation and project startup than the cancelled Alsands and Cold Lake mega-projects. The provincial and federal governments have provided tax and royalty concessions which essentially defer government revenue collection until after project investments have been recovered.
This paper reports on the employment and income impacts of the Wolf Lake Project, one of the new oil sands projects.

Oil Sands Fiscal Regime
The new fiscal regime for oil sands projects was designed prior to the implementation of the Western Accord, the latest federal-provincial agreement on energy pricing and taxation. Originally, the oil sands regime differed among projects but generally involved provincial royalty reductions and exemptions from the federal Petroleum and Gas Revenue Tax (PGRT) until project sponsors recovered investment costs. In addition, depletion allowances for capital expenditures were to be allowed as income tax deductions and the Alberta government provided Petroleum Incentive Program payments (APIP) on drilling and development expenses for eligible Canadian companies.
These fiscal provisions were designed to shorten the time required for the industry to recover its investment costs by delaying the majority of government revenue collection until after payout. In effect, government revenues were related more to project profitability than to gross revenue.
Under the terms of the Western Accord, PORT has been entirely eliminated for all new oil production projects, including new oil sands production, and will be phased out on existing production. The Alberta government has also eliminated APIPs on new projects and will "grandfather" APIPs on existing projects until April 1986.
The Wolf Lake project is expected to generate $181 million (1984 dollars) in provincial government revenue from royalties and corporate income tax net of APIP grants. The federal government will collect some $115.6 million (1984 dollars) by way of corporate income tax, net of investment tax credits. These figures are based on a cash flow analysis completed by BP Canada Inc. (BP), the project operator, and they exclude any additional government revenues collected through increased personal income taxes and excise taxes.

The Wolf Lake Project

Project Description
The Wolf Lake Project is one of the recent small-scale operations designed to recover bitumen from oil sands. Producing 1,100 m3 (7,000 barrels) per day, the project has an estimated ultimate recovery of approximately 9.7 million m3 (61 million barrels) over its 25-year life.
Wolf lake is designed to use cyclic steam stimulation with the possibility of in-situ combustion later in the project's life. Steam is injected into the formation for several weeks, is then turned off, and the bitumen is pumped to the surface through the same wells used for injection. Approximately 15 to 20 per cent of the bitumen in place is recovered.