Natural Gas

The race to the bottom is over

Proceeds from the BC Energy Ministry’s monthly sale of petroleum and natural gas rights were $1.3 million in May 2018. A decade ago, in today’s dollars, the May sale produced $521.3 million. This chart shows historical results, using 2018 dollars:

Petro rights 550

This illustrates the race to the bottom is over. Gas producers are victorious while we, the public, are badly beaten.

Not only have payments for the right to explore and produce dried up but so have royalty payments.

In the fiscal years 2016 and 2017, natural gas royalty payments totalled $291 million. However, credits owed producers increased $748 million so, if the province bothered to record these obligations as was recommended by the Office of the Auditor General, the royalty account had a two-year deficit of $457 million.

A decade ago, two fiscal years —  2006 and 2007 — produced gas royalty payments of $3.7 billion (2017 dollars) from substantially less production.

When John Horgan’s government was sworn in ten months ago, I expected them to revise BC Liberal energy policies. After all, the 2017 NDP platform boldly promised this:

The people of BC must get a fair return for our resources.

The numbers show the NDP promise was as hollow as an empty barrel of oil.

Categories: Natural Gas

9 replies »

  1. Oh my goodness Norman; If a private company were to put up these numbers it would be worse than insolvent. The trusting taxpayer is volunteered to pay the short falls. There is only one group doing the volunteering and that is our provincial politicians. Maybe if they had to put their pensions on the line they would be more prudent.

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  2. We’re on a merry go round. Stop…I want to get off. I actually had hope when the new government promised a new, responsible vision of our future….Yes, they’ve made some inroads on corruption but the boat continues to sink.

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  3. These should be long-term plans, not the next quarter. Hypothetically, gas gets the big push and export happens. How much is expected for royalties in that scenario? Let’s face it, the exploration rights are going to dwindle as the best areas get gobbled up. What will look better on the balance sheet is the production of gas.

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    • Except for the fact that net royalties were non-existent in the last two fiscal years and are forecast by government in its Budget and Fiscal Plan to continue at very low levels because of “increased utilization of royalty program credits.”

      Sorry, I don’t share your optimism since rates of production have been increasing over the past decade and public revenues have been declining.

      By the way, rights are bid on for specific time periods and, under Liberals, there was a trend toward 3-year terms. Unfortunately, at least for the provincial treasury, these licenses get renewed by the ministry without tender, and therefore without bonus bids, which are the primary source of revenue from rights.

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  4. This is what happens when the BC Liberals and the BC NDP are competing not for our votes but for mainstream media approval for elected government to perpetually deliver our regulatory, revenue and resource agencies to corporate control. The NDP, when elected by the media completes the BC Liberal corporate agenda, and when the Liberals are elected by the media they complete the BC NDP corporate agenda — so blamelessly our resources are liquidated, our resource rents are pilfered, our carrying capacity is diminished, and even our capability to redirect our economy and industries towards benign sustainability is profitably squandered to prevent all less exploitative alternatives. British Columbians have utterly irrational faith in government and they could not make rape, pillage and plunder more pleasant and risk-free for its entitled practitioners and their political henchflak. Thank-you Norman for these object lessons and case studies. michael\\

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  5. That woman that took a dump that was covered by global bc was just showing the BC Liberals how to shit and get off the pot.

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  6. I worked in Papua New Guinea training the local men to fall trees for the LNG Pipeline.These men were getting around 28.00 dollars for a 12 hr. day the rest of the workforce were getting less.This is slave labour. There is another push coming over there to open and start production in the coming year.
    The Fallers here fall trees for the right of way same job as PNG LNG with the experience that our Fallers have will be paid between $700.00 -$800.00 per day for a 6.5 hr work day.All the other work force will have very similar wages for a 12 hr. or more day.
    When I arrived back in B.C. Canada my home the big news was how the Liberals were going to start an LNG industry here in B.C. I almost fell over at the thought of the slave labour in PNG and how were these Liberals were going to compete, impossible to do I said to my wife they were going to have to give our LNG away for nothing in order to compete and even that would not be enough.
    So do not think I was there to take advantage of the PNG people, I was there to teach how to fall trees safely,and while I and 3 other Canadians where there and received very high praise for keeping the local men safe from the dangers of falling trees with vines tied into each tree. it was very heavy jungle and very dangerous for us Canadians, but we bonded with the local men and they kept us safe from the dangers of the jungle. Lovely People.
    We cannot compete as long as these oil and gas companies get away with the way they do business in vulnerable countries.

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