In British Columbia, the energy ministry is staffed by regulators who don’t believe in regulation. That is a BC Liberal philosophy sustained by NDP timidity because the Horgan Government is nervous about giving ammunition to opponents who accuse it of being anti-business, anti-development and anti-growth.
As a result, cartelized, profit-seeking natural gas producers still exercise undue influence over the energy ministry. This rich and sophisticated industry is well practiced in using financial weapons to procure its goals and policy makers in the civil service are soft targets. As Graeme Wood of Glacier Media reported:
Senior B.C. government employees are not subject to statutory financial disclosures, a key component of mitigating conflicts of interest and the potential for corruption.
Before appointment as Minister of Energy, Mines and Petroleum Resources, Michelle Mungall talked about the need to establish new directions in the technically complex department. However, the novice minister chose to keep senior management in place and maintain courses charted by her Liberal predecessors.
We can only assume that she consulted with her staff, that rhetoric subjugated reason and she folded.
Commenting on the previous In-Sights article, Lew Edwardson drew attention to a report on royalty programs dated February 2018. It was written by Inés Piccinino, then Assistant Deputy Minister Oil and Gas Division, now VP of the BC Oil and Gas Commission.
The ADM’s covering message reveals clear intention to promote increased fossil fuel production:
British Columbia (B.C.) has an enviable position in the North American energy picture. Abundant and diverse resources are transforming the Province into a clean energy powerhouse. Natural gas has a key role to play in this context. As the cleanest burning fossil fuel, natural gas is poised to replace other more carbon intensive sources of energy worldwide, thus reducing greenhouse gas emissions and contributing to better local air quality, economic growth and access to energy in developing countries.
The phrase “cleanest burning fossil fuel” is intended to misinform. It may be narrowly true but ignores the dirty processes that make natural gas ready to burn.
Most of the Piccinino report is a justification of the department’s failure to gain a material share of the value of natural gas produced in BC.
The Province has a series of natural gas royalty programs aimed at ensuring British Columbia’s fiscal regime remains competitive with other jurisdictions…
The ADM’s words mean that British Columbia is competing with Alberta and if that province intends to giveaway natural resources, this province will do the same.
B.C. royalty programs included lower royalty rates to encourage marginal and ultra-marginal natural gas wells, royalty credits for infrastructure development, a pilot program for royalty credits for upstream infrastructure that reduces upstream vented methane emissions (Clean Infrastructure Royalty Credit Program) which was run for the first time in 2016, royalty programs aimed at developing unconventional natural gas resources, which include royalty credits for deep gas exploration (deep well program), and the net profit royalty program...
That statement would graduate any bloviating bureaucrat still in training. The ADM could have said more simply that royalty credits have been extended to almost all activities of BC natural gas producers.
In fact, the report states that 91% accessed a royalty program and the few companies not participating are mostly operating conservation gas wells or producing gas out of oil wells. By design, those already pay very low royalty rates.
Rather than concluding that credits are too broadly allowed, the Ministry boasts 91% participation proves Goal 2 of BC’s royalty programs is met. It calls for “equal access to royalty programs.”
The Ministry’s report mentions an objective of maximizing royalties and taxes but BC treasury receipts demonstrate abject failure. Despite much higher production than two decades ago, the province’s natural gas revenue has steadily declined.
All the words mumbled by bureaucrats don’t change that fact.
Categories: Natural Gas