(1) 250.472.8528
andrew.weaver.mla@leg.bc.ca

Exploring the outrageous taxpayer subsidies for natural gas exploration

On Thursday this week I rose in the Legislature to ask the Minister of Energy, Mines and Petroleum Resources once more about the outrageous taxpayer subsidies to companies that drill for gas in northeastern BC. I initially raised this issue two weeks ago during budget estimates for the Ministry. As I noted then, the province makes virtually no money on natural gas royalties. And we have an accumulated $3.2 billion dollar tax credit subsidy on the books for this industry.

Below I reproduce the video and text of our exchange.


Video of Exchange



Question


A. Weaver: I must say it’s a bit rich. It’s a bit rich to listen to members opposite, the Leader of the Official Opposition stand up and talk about failed promises when I sat and listened for four years to the promise of unicorns in all of our backyards from LNG. On that topic, every year the B.C. government…

Interjections.

Mr. Speaker: Members, we shall hear the question.

A. Weaver: …doles out hundreds of millions of dollars to oil and gas companies to subsidize horizontal drilling in the northeast of our province. The companies earn these credits by drilling qualified wells, and when the wells start to produce gas, the companies apply the credits to reduce or even eliminate provincial royalties that they normally pay on this public resource.

In recent years, the participating companies have amassed credits faster than they can spend them. The balance in their deep-drilling account has increased from $752 million in 2012 to an accumulated $3.2 billion today. Not only are we not getting paid for this public resource, we are literally paying companies to take it from us.

My question is to the Minister of Energy, Mines and Petroleum Resources. How can the minister justify continuing the deep-well royalty program when it is not needed by gas companies and it is such a staggering waste of taxpayer money?


Answer


Hon. M. Mungall: Thank you to the member for the question on what is a very important issue.

Let me start by saying that British Columbians want this government to ensure that projects are providing good family-supporting jobs, but they also want to make sure that projects are meeting high environmental standards — absolutely. They want to make sure that British Columbians are also getting a fair rate of return.

Last year the province received $145 million in royalty revenue from natural gas development. This money obviously goes to help support the services that British Columbians rely on every day.

We also want to ensure that, as I said, we’re meeting the highest standard of environmental protection. That’s why this government has announced that it will be moving forward with a hydraulic fracturing scientific review panel. That panel is going to be getting started in the new year, and we’ll have more details following January.

Most importantly, this government is committed to ensuring that all British Columbians benefit from safe and sustainable development in this province, and that’s what we’re going to be doing.


Supplementary Question


Mr. Speaker: Leader of the Third Party on a supplemental.

A. Weaver: It was so boisterous I couldn’t hear you acknowledging my standing here.

The deep-well royalty credit program was designed to enable the provincial government to share the costs of drilling in B.C.’s deep gas basins when it was a so-called risk-based industry. It’s not anymore. Horizontal fracturing is no longer a new technology. It’s become an industry norm.

In 2009 and again in 2014, the B.C. Liberals relaxed the requirements for deep-well credits so they could pay companies more money to drill. In the eight years prior to the 2009 changes, B.C. collected an average of $1.3 billion per year in natural gas royalties. In the eight years since, B.C. collected an average of $307 million per year. Last year, the minister told us, we collected a mere $145 million.

Measured as a share of the value of oil and gas production in B.C., royalties collected by government…

Interjections.

Mr. Speaker: Members.

A. Weaver: …has fallen from 44 percent in 2008 to just 4 percent last year. Our government is literally giving away our natural resource and paying oil and gas companies to extract it.

My question to the hon. Minister of Energy Mines and Petroleum Resources is this: how can your government continue with this giveaway when there is such an urgent need in our society to transition to a low-carbon economy?


Answer


Hon. M. Mungall: To speak to this particular program, I just want to make sure that the member knows that many of the credits that he speaks of will actually likely never be used as older wells are closed. Just as an example, one well earned a million dollars worth of credits, but it’s been shut for ten years. It’s not going to reopen, so it will not actually be realizing those credits.

There are quite a few other examples exactly like this. I would be happy to set up a briefing for the member so that he could get to the full details of this issue that, I’m very glad, he’s quite concerned about. Question period doesn’t allow the time to go over all the details.

Again, I will say that this government is committed to ensuring that British Columbians get a fair rate of return for their resources, that they have good family-supporting jobs and that we are protecting our environment.

One Comment

  1. Gord Okell-Reply
    December 3, 2017 at 11:20 am

    The corrupt BC Liberals allowed this nonsense to start cancel the credits on the books now and any future credits .Let the companys leave others will take over what has the govt got to loose. Giving things away to the oil & gas industry jeez call a inquirey into the corrupt 16 yrs

Leave A Comment