Natural Gas

Natural gas revenues in BC

The 2017 BC NDP platform promised:

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

That pledge was immediately dropped and the party’s 2020 platform promised only a “comprehensive review” of oil and gas revenues. That has not been a priority in the more than four years John Horgan has been Premier.

Imagine a trauma patient arriving in hospital with a pulsing arterial bleed, and physicians deciding to study the patient’s medical history before treating the wound.

Regular readers know British Columbia is receiving a much lower share of natural gas revenues than it once did, despite substantially higher production volumes. Those who pay attention only to corporate media will be unaware.

One might expect that when volumes produced increase by 223%, public revenues might rise as well. Not in British Columbia, where fossil fuel producers are treated as a privileged class.

Writing at the Canadian Centre For Policy Alternative’s Policy Note, Marc Lee and Seth Klein explained the revenue system in British Columbia:

There are two components to gas royalties in BC. First, companies bid in auctions for land tenure rights for exploration, and second, they pay a royalty on actual production…

BC’s royalty regime is primarily based on the price of gas rather than the volume produced. Low market prices in recent years have been a critical factor behind lower royalty revenues…

A second part of the decline is the expanded use of subsidies/incentives in the form of royalty credits introduced primarily to encourage fracking… Credits can be stockpiled to be claimed against future royalties owing. Freedom of information requests made by CCPA’s Ben Parfitt revealed that some 26 companies garnered just over $700 million in deep well credits in 2017/18 alone…

At March 31 2021, unclaimed royalty credits totalled $3.25 billion. Politicians downplay that number, saying that not all credits will be claimed in the future. Yet credits taken in the last three years averaged more than $600 million in each 12 month period and royalty reductions are likely to near $1 billion in the current fiscal year.

Lee and Klein suggest changes that would alter the landscape if the province was governed by a party that cared about fair treatment of the public and the climate crisis:

  • A moratorium on issuing new leases/tenures—this could include restrictions on extensions of existing leases and reclamation of existing licenses that expire…
  • Increase royalty rates and set a minimum royalty per unit extracted…
  • Use increased royalty revenues to support worker transitions and community transitions related to a managed wind down. This would include investing in economic diversification, green infrastructure and remediation activities…
  • Eliminate subsidies for fracking…
  • Shift to public ownership—companies invest in order to grow and generate revenues and profits for investors, a business model that may well be inconsistent with the wind down we are seeking. An alternative would be to use a Crown energy corporation as a focal point for the transition…

Categories: Natural Gas, Uncategorized

3 replies »

  1. Is there any way that John Horgan and his cabinet can be charged with breach of trust or breach of fiduciary responsibility?


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