Governments capture a share of the value from oil and gas development in several ways. In BC this mainly concerns natural gas because oil production is relatively small.

Royalties are one source of revenue. They vary with gas prices, production volumes, and allowable deductions. Historically, BC kept royalty costs relatively low and offered generous credits to encourage drilling and compete with Alberta. Although some of these programs have ended for new wells, credits accumulated under the old system—more than $1 billion—will still reduce royalties paid to the province.

Fresh water is a commodity that fracking gas companies need in massive amounts. Stand.Earth says this is “a record-breaking giveaway of our most precious resource”.

Industrial water users in B.C., including the oil and gas sector, pay some of the lowest water rates anywhere in Canada. Because the fees are not even high enough to cover the cost of administering the permits effectively, the current water permitting system costs the provincial government more than the revenue it generates…

Here in B.C., we charge industrial water users just $2.25 in water rent per million litres they use. That means that the entire oil and gas sector will pay the Province of B.C. just over $20,000 for nine billion litres of freshwater they used in 2024. That’s not even enough revenue to cover the salaries of the B.C. Energy Regulator staff that administer and track these permits.

Stand.Earth

I guess we can’t include water rights as a revenue source for BC. Nor does the province benefit from selling electricity to the gas industry. BC Hydro sells power to gas producers below the price it pays independent power producers.

The sale of Crown drilling rights once delivered large sums to the provincial treasury. Companies bid for available parcels and pay bonuses reflecting the value they place on the areas. The term of these tenures varies. In the most recent sale, 80% of the tenures lasted either three or five years, while 20% lasted ten years.

Once tenure is established, companies may continue their rights without another competitive auction. This partly explains why auctions for gas rights now produce meagre amounts for the public treasury, despite the industry producing greater volumes of natural gas.

Gas production in BC increased by 264% between 2025 and 2000. We might expect that government revenues would rise by roughly the same amount. However, that has not happened. Under the leadership of Clark, Horgan, and Eby, the government of British Columbia has been determined to subsidize the production of fossil fuels. Some of those subsidies are obvious; some are hidden.