British Columbia exploration

Patrick Crow
Washington, D.C.
[email protected]

The province of British Columbia is doing (almost) everything it can to encourage oil and gas exploration.

Last spring, the provincial government and the oil industry negotiated regulatory and tax changes to prompt industry to commit to investing $25 billion (Canadian) over the next 10 years.

Premier Glen Clark said, "This is the most significant change we have ever made in British Columbia to enhance conditions for more investment and job creation in this sector. We are making British Columbia one of the most attractive places for oil and gas investment in the world."

Oil firms promised to double British Columbian oil and gas production capacity by 2008, drill more wells, and create a $5 million environmental fund.

Government pledged to reduce royalty rates, improve northern roads, work with tribes to smooth exploration, and create a single-window permitting agency.

Results

Both sides are fulfilling their promises. Industry bought $6.2 million worth of oil and gas rights from the province in July and was poised for another strong sale late in August. There were 25 rigs working in northeastern British Columbia this summer.

In June, the Ministry of Energy and Mines proposed an oil and gas commission that will issue all permits required for northeastern oil and gas activities, including those currently issued by other agencies.

Effective June 1, the province reduced royalties for gas wells drilled on lands acquired after May 31, 1998, and before Jan. 1, 2002, to 9% from 15%. Oil discoveries made after June 1, 1998, will be eligible for a royalty 20% lower than the existing "new oil" royalty formula.

And the government opened talks with five northeastern tribes to draft referral procedures for oil and gas applications that will respect treaty and aboriginal rights and create greater operating certainty.

Offshore

But the government remains cool to offshore drilling.

A group of Prince Rupert citizens have formed the North Coast Oil & Gas Task Force with the goal of lifting the 1972 federal and provincial moratorium that froze activity on 22 million hectares of federal leases.

This summer, the Geological Survey of Canada said the northern coast could hold more than 9.8 billion bbl of oil and 42 tcf of gas worth more than $50 billion.

John Winter, president of the British Columbia Chamber of Commerce, said, "We'd like to give the private sector a chance to do some offshore exploration in the Queen Charlotte basin. Right now, the economy up north depends on seasonal tourism, declining fish stocks, and the forest industry-which is far from stable. Economic diversification is crucial."

But Premier Clark recently said, "We're not intending to lift the moratorium at this time. There has been some rumbling about the possibility of oil and gas exploration off the coast. British Columbians are very strongly environmentally concerned, and so is my government, so we would not do that lightly."