March 27 (Bloomberg) -- Alberta’s deficits for this fiscal year and next will be less than the province forecast in its March 7 budget as Canadian oil trades higher relative to world benchmarks, said Finance Minister Doug Horner.
The difference in the price of Western Canada Select, a blend of heavy Canadian oil refined from bitumen, compared with West Texas Intermediate, the U.S. benchmark, has narrowed 36 percent since Horner delivered the budget three weeks ago. Horner attributed the narrowing gap to the increased use of rail shipments.
Alberta, which sits on the world’s third-largest pool of crude reserves, relies on royalties and taxation of the oil and natural gas industry for about a third of its revenue.
“We’re looking very conservative in our numbers,” Horner said today during an interview at Bloomberg’s Toronto office. “Our year-end is going to look better than anticipated.”
The oil-sands benchmark, West Canada select, traded at $80.83 a barrel at 1:05 p.m. in New York, or $15.25 less than U.S. crude. The gap reached a record $42.50 on Dec. 14.
Alberta, the wealthiest of Canada’s 10 provinces, expects 2.9 percent economic growth in 2013, and an average of C$68.21 per barrel for the benchmark Western Canada Select.
The province will probably post a narrower shortfall for the fiscal year ending March 31 than the budget forecast of C$3.9 billion ($3.8 billion), Horner said, declining to provide a new projection.
On March 7, he reduced his forecasts for resource revenue this fiscal year and next by C$10.2 billion, or 12 percent of total revenue over two years.
Alberta will borrow C$3.19 billion in 2013-14, and bring forward C$1.07 billion borrowed in 2012-13 to help pay for C$5.21 billion in capital spending, including 50 new schools, widening the highway to Fort McMurray, the oil sands boom town, and new health care facilities.
The western province has C$16.6 billion in outstanding bonds, according to data compiled by Bloomberg, with about C$2.7 billion of that due in 2013. Alberta’s debt is rated AAA, the highest level, with a stable outlook by Standard & Poor’s.
To contact the reporter on this story: Jeremy van Loon in Calgary at firstname.lastname@example.org