Natural Gas

Ending natural gas giveaways?

On the campaign trail, Christy Clark had some words while speaking in Fort St. John. She said:

We have a party (the NDP) that doesn’t believe in natural gas. They want to put a moratorium on even getting it out of the ground.

Had she wished to be accurate, these are the words she might have uttered:

We have a party (the NDP) that doesn’t believe in giving away natural gas. They want to gain a share for the public when producers get it out of the ground.

The four monthly auctions of petroleum and natural gas rights since John Horgan became Premier indicate the industry accepts it must pay more than it did under Christy Clark.

Don’t worry about the gas producers though. The industry’s investment in Ms. Clark paid off handsomely while she sat at the head of the Liberal Cabinet table.

gas rights 520

Bonus 520

shale-gas-drilling-in-northeast-bc 520


Earlier this year, economist Marc Lee wrote about BC’s natural gas revenues BC’s natural gas giveaway: Production soars, revenues plummet

Not long ago, BC received huge annual royalty revenues from its growing natural gas sector. The revenues were often billed as paying for essential public services like health care and education, and were appealing politically as they meant governments did not have to raise taxes to do so.

The provincial government claimed that new production to supply a Liquified Natural Gas (LNG) export industry would raise a further $100 billion, called a Prosperity Fund, and would pay for increased services, tax cuts and/or reductions in the public debt. The “Debt Free BC” wrap on the BC Liberals’ 2013 election tour bus was predicated on these future royalties for BC gas.

Those days are gone. And even worse, BC has more recently been giving away gas worth billions without a fair return to the public treasury…

Categories: Natural Gas

8 replies »

  1. This is encouraging news, Norm.

    One might suspect the current government has been reading your work and decided to affect some positive changes…

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  2. Interesting article about Norway’s system: https://www.adn.com/energy/article/oil-and-gas-development-does-norway-do-better-job-alaska/2011/09/10/

    “Norway’s income tax on oil and gas profits has two components: A 28 percent tax on profits (the same income tax charged on all businesses in Norway), and a special 50 percent tax on profits from offshore oil and gas production, for a total tax of 78 percent. (All of Norway’s oil and gas production comes from offshore federal leases.)”

    “Oil and gas lease bidding
    The bid process in Norway is much different than in Alaska or elsewhere in the United States (Canada, too). Bidders do not pay a bonus, nor do they offer any upfront cash. The government sets out clear criteria in its bid notice, including the share it may retain for Petoro, and then sits back and judges the bidders to determine which companies can do the best job.
    Before going out to bid, the government pays for seismic work – not too detailed – to give it and bidders a better idea of what may be out there.
    Bid criteria include experience and expertise in the geology necessary to explore and produce a particular prospect, management skills, financial capability, and a development plan judged most likely to produce results. The process keeps speculators out of the game, which is good, government officials said. Norway wants results, not investors looking to turn leases at a profit.
    And here’s something you don’t see much in Alaska, or anywhere in the United States for that matter: Losing bidders cannot protest or challenge the government decision. Norwegian officials said they explain to losing bidders why they didn’t get the lease, so that they can try harder next time to win.
    If a winning bidder fails to act within the timeframe specified in its development plan, extensions are possible but not likely. Failure to work on time means the lease goes back to the government. That’s somewhat less painful than it is in Alaska or in a federal lease sale where winning bidders pay millions, tens of millions or even a billion dollars or two to win a large swath of leases. If they lose their leases due to inaction, they lose their costly bonus payments.”

    Note in the article the tax incentive to attract developers to Norway’s far north. Profits taxed at “just 28 percent”.

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    • The tax system explains how Norway has accumulated a national wealth fund of about C$1.25 trillion. Years ago, the oil & gas industry told the government that proposed tax levels were unacceptable and would lead to an industry shut down in Norway.

      The Norwegian politicians of the day were brave and wise enough to stand their ground and, faced with a prospect of some profits or no profits, the oil and gas industry continued operating and paid material sums for the natural resources they were extracting. Government put much of that money aside, investing it internationally so that the current population would be protected from “Dutch Disease” and future generations would get a share of the assets that were being depleted.

      However, the industrialists have since paid more attention to political action and they’ve done much to encourage neoliberalism in Norway. They understand the benefits to be gained by dominating the media and influencing the educational system. Time will tell if Norway’s accumulated wealth ultimately serves the general public or the nation’s elites.

      Liked by 1 person

  3. Glad to see that this new NDP government will be making the industries start to pay their share. No more free rides. Christy Clark and BC Liberals did us a real service by cutting all services to human beings and giving it to the corporations. (Sarcasm) Really good governing from the BC ReCONservative Liberals! The BC Liberals should not even try to open their mouths in the Legislature against anything put forward by the new NDP government nor the Greens. They sold their right to speak out for the little guy and middle class after 16 years of porkbarrelling and lining their pockets.

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