CALGARY, Alberta—Alberta's government will plow $396 million into the oil sands hub of Fort McMurray to help the struggling city deal with strains on health care, affordable housing and other services, Premier Ed Stelmach said Monday.
Stelmach stopped short, however, of using regulatory means to rein in the pace of oil sands development in the Western Canadian province, site of more than $100 billion in current and planned investments.
"We are worried about the kinds of messages we send to different parts of the world," Stelmach told reporters in the provincial capital of Edmonton.
"We are the only real secure supply of oil and I'd like to make sure that as a province, we maintain our reputation of always having a predictable investment climate."
Stelmach made the Fort McMurray funding announcement as his government predicted a budget surplus of $7 billion for 2006-07, which would be the second biggest surplus in Alberta's history.
In a third-quarter forecast, it raised its revenue expectations by C$1.5 billion from the last quarterly outlook to C$36.6 billion, citing higher-than expected corporate taxes and strong returns from investments.
Over the next decade, oil sands production is expected to more than triple from about one million barrels a day currently as a raft of projects around Fort McMurray starts up to meet growing demand for secure supplies, especially in the United States.
That has meant a flood of dollars into the northeastern Alberta region, but also big strains on public services, infrastructure, the environment and housing as the population has ballooned by more than 50 percent in the past decade to more than 60,000.
And despite an influx of Canadian and overseas workers, a tight labor market has caused major cost overruns and delays in the oil sands projects.
Stelmach's predecessor as Conservative leader, Ralph Klein, conceded when he retired last year that his government didn't adequately plan for the robust economic growth in the province. Growth in Alberta, fueled by high oil and gas prices, has consistently led nation.
The strains, as well as record oil industry profits, have spurred calls from various quarters in Alberta to charge companies higher royalty rates to control the pace of oil sands development.
Of the $396 million that the Alberta government will invest in Fort McMurray over three years, $206 million will go toward health care, $103 million for water and waste water treatment, $53 million for affordable housing, and $34 million for other items.
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