Natural Gas

Not even a peanut stand

Today W.A.C. Bennett was proved correct when he said the BC NDP was unfit to manage a peanut stand. There’s not much more to say about Site C other than everything government has said about the dam before now was wrong.

Don’t expect the latest estimate of $16 billion to be correct.

Truthiness rules in British Columbia.

Believe it or not, the Horgan Government is even worse than BC Liberals on natural gas. Of course, BC NDP will not admit it. Truthiness allows fossil fuels to be described as clean energy.

Public receipts for natural gas exploration and production hit the skids under Christy Clark. Under John Horgan, rights payments have ended. Barely anyone noticed.

After suspending monthly sales of petroleum and natural gas rights in February 2020, a single small parcel was offered in February, with the next sale scheduled for April. There is no result reported for the February tender and the one in April is now cancelled.

Effectively, the BC NDP is eliminating the public share’s of natural gas values. The industry is getting billions of dollars in royalty credits so while production has been increasing, net royalties flowing to the public treasury have been declining.

Now, once lucrative payments to the province for rights to explore for and produce natural gas have hit zero. This data, taken today from a government website references the bonus bids for oil and gas rights.


Categories: Natural Gas

20 replies »

  1. the crooked corruption concerning site c is never going to end-the govt of the day will finish site c and weather it costs 22 billion or not is immaterial-the crooked corrupt bc govt of the day will fleece the tax payer for the costs-weather the site c dam holds water or not does matter the crooked corrupt corporations are being paid for work done and if the dam does not hold water and does not produce a volt and washes out the corporations building this white elephant will be paid again to clean up the mess all on the bc taxpayers back–this is the grandest most crooked corruptive scam in bc history and in the end no one will be held crimminally accountable for anything–mark meiers-charlie lk bc

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      • BC Liberals are responsible for the first few billion spent mistakenly but BC NDP have been wrong at every decision point.

        Even before the 2017 election, the party’s leadership had decided Site C would continue. Partly it was fear of being again branded the “party of no.” But, perhaps more importantly, major financial support was needed from large unions to conduct the campaign. They got the money and went forward. But, one favour begets another favour, often a larger one.

        Obstinate determination to continue Site C is a favour awarded major financial supporters.

        Liked by 1 person

      • Horgan could have cut OUR losses at $3 billion, but he kicked the can down the road so that cancellation losses ballooned to $10 billion. Horgan is responsible for $7 billion of that cost, the Liberals the rest.

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        • Even the $10 billion loss claimed by the BC Government is untrue. They’ve continually underestimated completion cost and overestimated the cost of cessation.

          Some of what has been created, such as roads, bridges, workcamp facilities, etc. retain value. Employment has been provided to tradespeople at rates up to $45 an hour and to professionals at rates much higher. There have been vast sums paid to businesses, which stimulated the economies of northeast BC, Metro Vancouver, and other places. It’s not like $6 billion in cash and was taken out to sea and dumped with zero return.

          But, that money is gone. Now, instead of spending another $8 billion or $10 billion on Site C, put it to better use, save 50+miles of Peace River Valley and demonstrate to Indigenous people they’re territorial rights will not be furthered damaged.

          It’s been demonstrated that less costly non-destructive renewable energy sources can be put in place when demand demonstrates a need. Site C jobs can be replaced by reverting to the PowerBC program BC NDP sold to the electorate in 2017. That would focus on creating long term energy efficiencies.

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  2. The new Site C cost projection was a shocker – $16 billion. Unfortunately, like all the previous projections this one will prove to be too low. And yet this is not the complete story. Horgan made it clear that he wants to keep Hydro rate increases below 3%. To do this he plans to amortize the borrowed money to build Site C over 100 years. If you use a build cost of $16 billion and apply an average financing cost of 3.5% over 100 years you end up with a final price tag ( principal + interest) equal to approx. $57.85 billion. Generations will be paying for this mess for a long time. Norm, please correct my math if it is wrong. Thanks, Pat

    Liked by 1 person

  3. My guess is that Horgan has got himself (and us) into a horrible financial dilemma that he cannot escape. It goes like this: The five giant companies investing $40 billion in LNG Canada at Kitimat (Shell, Petronas, PetroChina, Mitsubishi, and Korea Gas) would certainly not risk such a large investment without contractual guarantees of full compensation if the agreement was breached in any way.

    They would want full repayment of the $40 billion invested, plus the loss of anticipated profits of around $2 billion a year (at 5%).

    I assume the contract included the supply of extremely large amounts of electricity at a highly subsidized price. This, of course, forces the completion of the Site-C dam – regardless of what a boondoggle it has been.

    So the choice is between wasting another $8 billion on an unnecessary dam or compensating the Investors to the tune of $40 billion plus – a lose / lose situation. We’ll be the ones paying for it.

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    • Because the arrangements made with LNG companies are secret, we may never know if what Douglas Carrick suggests is true or not.

      Government secrecy is nearly always dangerous… for taxpayers.

      NDP promised transparency; they’ve delivered nothing of the sort.

      NDP promised truth; they delivered the oppposite.

      Liked by 1 person

  4. This comes as no surprise, the NDP just loves these “Fast Ferry” sort of projects.

    What I do believe is Horgan is not in control. He is a mere puppet, brought out for Photo-ops and scripted sound bites.

    This leaves the question: “Who is in control?”

    The North Korean style of secrecy that surrounds Horgan is telling and without any sort of transparency, made worse by Covid -19 and a lack lustre media.

    Fast ferries cost the NDP dearly, 19 years in the political wilderness, this damn dam may see the end of the NDP altogether as no real “Green” supporter would ever cast a ballot for this lot. No true environmentalist would ever support them; hell no one with any fiscal aptitude will support them. The party may fracture and morph into a tawdry labour party, with only union support.

    Who controls the NDP? Who is in charge of this clattering train?

    Who is the real premier, calling the shots?

    Only history will tell us in the end.

    Adios, the NDP as Premier has not read history, did not learn from history and is about to repeat history only this time, the NDP may never again gain control of the province and like its federal counterpart, remain toothless forever.

    Liked by 2 people

  5. I have no doubt that your points are accurate, Norm — but I want to better understand the natural gas $ structure.

    • “Zero hectares disposed” means drillers aren’t leasing any more land… they already have enough socked away — and LNG isn’t ready for big volume?

    • Are there annual fees for leasing, even if the land is not being actively mined?

    • What is a “tender bonus?”

    • Royalty credits… are they explained as a way of subsidizing drillers for the cost of drilling, since rampant fracking in the USA killed the price of natural gas. Drillers: “Look: we’re making nothing from our gas fields, so if you want product to heat your homes and businesses, we demand a subsidy.”?

    • Other than income taxes (minus remote worksite credits) on workers and support industries, are there any income streams still coming out of natural gas mining?

    Thanks for your continued vigilance on matters concerning the public purse and transparency in government, Norm.

    When the Liberals were in power, folks might have assumed that your speaking in favour of a new (aka NDP) government meant that you’d be giving them an easy ride if they got in. I recall you saying that you would continue to hold a new government’s feet to the fire, whatever their party affiliation. Thanks for staying true to your word.

    Liked by 2 people

    • Parcels of land were previously offered, giving oil and gas companies rights to explore for or produce gas and oil during the term of a completed agreement. Terms were usually three, five or ten years, mostly the shorter periods. Bidders competed to acquire a parcel, offering to pay a bonus over the standard per-hectare rental amount. Government reserved the right to not accept the highest bid. Promising parcels attracted larger bonuses.

      BC NDP is not transparent about how rights are being handled now but it is clear that when the initial terms expire, those parcels are not re-offered by tender.

      We know that government is awarding rights to oil and gas companies by administrative decree. No information is made public about deals made behind closed doors but the absence of revenue suggests the O&G companies pay nothing more than the modest rentals.

      Drilling credits were introduced by Liberals, allegedly to encourage production of gas that would otherwise be left in the ground because of its marginal value. Government initially promoted them as encouragements for “deep drilling.”

      However, most BC gas came to be considered “marginal” and it was common for royalty credits to be earned. Accounting treatment of the credits was disputed by then Auditor General Doyle. He wanted the balance to be recognized as a provincial liability. Government fought that and ultimately removed Doyle. Subsequent AGs have acquiesced to the government on this issue, using what I regard as specious reasoning. So, about $3 billion of credits that will reduce future royalty payments are unrecorded.

      In fact, BC had decided to be “competitive” with other jurisdictions in amounts charged producers. Alberta governments, firmly in the grip of the O&G industry, had little interest in maximizing the public return for resource production.

      So, as Alberta reduced the public share, British Columbia followed. Politically, it was more expedient to do it indirectly to avoid public notice. Instead of eliminating royalties, BC’s credits program was implemented and people were told these were to encourage output of marginal product. The claim was, “We need to reduce producers’ costs or they’ll withdraw and we’ll get nothing.”

      Of course, the volume of gas produced rose steadily while public receipts declined.

      BC Government’s commitment to softball treatment of gas producers was encouraged by Christy Clark’s transition advisor and Fraser Institute funder Gwyn Morgan, the former chairman of SNC-Lavalin and past president and CEO of huge gas company EnCana Corporation, which now carries the clunky name Ovintiv Inc.

      In 2017, I expected BC NDP would curtail the royalty credits program since they had campaigned on a “fair public share of natural resources.” However, an early clue that my expectation was foolish was John Horgan’s promotion of a former Fraser Institute Director, the very right-wing Fazil Mihlar.

      Mihlar is now Deputy Minister of Ministry of Energy, Mines & Petroleum Resources. The Tyee’s Andrew Macleod referred to him “a notable Vancouver Sun columnist opposed to minimum wage, unions and public ownership.”

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  6. Both liberals and NDP are corrupt as hell.

    We will need to vote them both out next election and hound them every day until then. We cannot afford this corruption anymore as it will hamper our ability to adapt to the transition required over the next two decades.

    I love this province… if it weren’t so beautiful, I’d flee this Kakistocracy

    Liked by 1 person

    • Me too! But where would you go? I shouldn’t say this, because someone, somewhere is surely monitoring every word I write, but as I age I’m considering taking some of these bastards out and resigning myself to government provided free room and board, medical facilities, etc, etc.
      But not for a few years!
      Ha,ha! just kidding, Monitor.

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      • I feel your absolute “loss” with our politicians. They have taken democracy away from us and morphed into a 4 year game.

        Today we elect criminal bosses who do as they please and bribe us to vote for them every 4 years, during which the rape of their politcal friends, rape the province.

        Soon there will be nothing left, except massive gated communities for the wealthy and tent cities for the starving masses. A hell of a future awaits us.

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      • Quote: “C Government’s commitment to softball treatment of gas producers was encouraged by Christy Clark’s transition advisor and Fraser Institute funder Gwyn Morgan, the former chairman of SNC-Lavalin”

        SNC Lavalin; SNC Lavalin, that evil name keeps rising from one controversial project to another.

        Any project in BC that has had any association with SNC Lavalin proper; former executives and CEO’s; and former engineering employees should demand a criminal investigation!

        This company is a pox on Canada.

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  7. I’ve come to realize after supporting the NDP for 50 years, that not a single one of them can be, or should be, trusted. Mr. Horgan shook my hand, looked me straight in the eye, and lied about stopping Site C. He single handedly cost the NDP my support, and the support of my entire family…to say nothing of those I chat with about politics. I have to say, as they do “waking up feels good.”

    Not everyone covered by a union contract supports the NDP. I sincerely hope more waken in time for the next election.

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