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Shell to take over marketing most of Alberta’s oil-royalty barrels

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Screen Shot 2015-01-06 at 21.26.38By Nia Williams

CALGARY, Alberta, May 11 (Reuters) – Shell Trading Canada, a unit of Royal Dutch Shell (Xetra: R6C1.DEnews) , will take over the task of marketing nearly all the barrels of crude oil that the province of Alberta receives from producers as royalties.

From June 1, Shell (LSE: RDSB.Lnews) will market 90 percent of the nearly 70,000 barrels per day of conventional crude that Alberta takes in lieu of cash royalties, according to a statement on the Alberta Petroleum Marketing Commission (APMC) website.

The APMC will continue to sell the remaining 10 percent.

“We had a competitive process and they (Shell) were the successful bidder. We were looking for things like quality of service, pricing and cost,” said Richard Masson, APMC’s chief executive.

The two-year crude marketing contract will remain in place even if Alberta’s new left-leaning New Democratic Party (NDP) government changes how royalty rates are calculated.

The NDP stunned many in the oil industry by winning a landslide victory in last week’s provincial election.

NDP Premier-elect Rachel Notley has pledged to review within the next six months the royalties that producers pay to the government for tapping provincially owned oil and gas reserves.

“Practically, for how we collect barrels, things would not change,” Masson said.

The APMC uses almost 5,000 oil-tank batteries and 180 pipelines to collect about 17 percent of Alberta’s conventional crude production as royalties.

Marketers were invited to bid for the contract after Nexen (KSE: 005725.KSnews) Energy, a wholly owned subsidiary of China’s CNOOC Ltd (NYSE: CEOnews) , which previously sold half of Alberta’s royalty barrels, said it will shut down worldwide trading operations in March.

Masson said volumes were likely to be lower than 70,000 bpd this year as royalty rates are affected by the price of benchmark crude oil, which has fallen by around 40 percent since last June.

(Editing by Peter Galloway)

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