Mining and Energy

B.C. government to forgo natural gas royalties to boost investment

Fri Sep 21, 2012 11:15am PST

Despite facing a $1 billion shortfall from conventional gas royalties, the B.C. government plans to forgo future royalties from the nascent natural gas industry in order to kickstart it, Rich Coleman said Thursday.

At a BC Energy Conference in Dawson Creek, the deputy premier and energy and mines minister announced $120 million worth of “royalty deductions” that he said will lead to investment in 21 infrastructure projects in northeastern B.C., where most of B.C. natural gas is located.

The credits are intended to “expedite” the growth of the natural gas industry, including the liquefied natural gas sector, by giving incentives to capital investments in basic infrastructure such as roads.

According to a government press release, companies participating in the program would be able to recover up to 50% of a project’s cost through deductions that reduce the royalties those companies would pay later. The program is expected to generate $260 million in new spending in B.C., according to the new release.

It’s not clear how much the province stands to lose in future royalties. Just last week, Finance Minister Mike de Jong announced severe belt-tightening measures in response to drastically falling natural gas royalties.

Natural gas prices are so low, the province now expects to see royalties it collects from that sector drop by about $1.1 billion over three years.


Tags: Mike de Jong, Rich Coleman, investments, prices, natural gas, energy

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