December 12 was BC’s final offering of petroleum and natural gas rights for 2018. In the last six months, the province realized a total of $4.8 million from these regular public tenders, including fees, rents and bonus bids.
That $4.8 million is only 1% of the average amount realized from rights offerings in the second halves of the preceding 20 years, calculated in 2018 dollars. This charts the revenues in the second halves of the last dozen years.
One of the reasons for the decline in revenue is that rights are now tendered for short terms — usually three or five years — but those rights can be renewed indefinitely by the Ministry of Energy, Mines and Petroleum Resources, without tendering or further payments of bonuses.
The result is that fewer and fewer parcels are available for tender each month. In the second half of 2018, the lands tendered were only 6% of the average in the same periods of the preceding 20 years. This charts hectares offered in the second halves of the last twelve years:
Tendering land parcels for short terms gives substantial advantage to gas companies already operating in the area and discourages entries of new players. Corporations that have developed close relations with ministry officials hold a competitive advantage over all others.
Were expired rights put out to tender again, the province’s revenue would look far different. Administrative renewals ensure the industry’s current participants remain dominant.
As is typical of resource management, the regulating ministry sees its prime purpose is to enhance growth and profitability of companies extracting resources. the public share of produced values is no longer material.
This cozy relationship costs taxpayers billions of dollars, money that could be spent on renewable energy, transit, daycare, education or many other responsibilities of government.