Natural Gas

Ministry’s cozy relationship with industry costs taxpayers billions

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.

Categories: Natural Gas, oil and gas

5 replies »

  1. ahhhhh, they see it to enhance profitability of corporations, etc. Not so much. In my opinion, this ministry works for the taxpaying citizens of B.C. and they ought to be ensuring the citizens of this province get the best deal, not the corporations. Some one might want to remind the people who work in this department, they work for us, the “ordinary taxpayers” not the corporations. Perhaps it is time to review the tenure of the Minister, the Deputy Minister, etc.

    Right now this province could use a lot more money given the new schools and hospitals we need, not to mention the new highways.

    The Alaska Highway News, recently had an article up about the Blueberry Band objecting to the “invasion” of their traditional territory by all these oil wells, mines, roads, etc. In fact it has been disrupting their way of life and their ability to hunt. It’s time the province figured out who they work for, us or the corporations. It was over whelming to read the number of oil wells, etc. in the area. If this were going on in the lower mainland, we’d have riots in the streets. We need to seriously look at these “leases” because it isn’t up to these bureaucrats to “give away” our province. its to ensure the First Nations can continue with their way of life and for the provincial coffers to make money. The interests of the corporations, which frequently aren’t Canadian, ought to be a long way down the roll.

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  2. We have all heard how Norway used their oil/gas resources to build it’s wealth. How come our own Governments seem to rejects Norway’s lead? We could even expand their idea and include other resourses that are extracted such as minerals and logs.

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    • Here in Canada and especially BC we’ve had an unfortunate run of continual bad governments with morally bankrupt and corrupt leaderships that have sold the people out and jumped in bed with the corporate robber barons. Robber Baron still has a ring to it even in modern times. I hear it used more often lately. Will a Yellow Jacket style movement ever be needed and flourish here to save this great country. I wonder.

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    • Sadly years of industry lobbying has gutted the royalty returns from oil/gas extraction to almost infinitesimal amounts. This tact shows no sign of being stopped, the new LNG plant is just the latest case of almost free resource extraction. Alberta used to have a massive fund created by oil/gas royalties, only took 2 terms from a mostly drunken Premier to undo that legacy.

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