A glut of shale gas finds across the continent have reduced natural gas prices recently, but that hasn’t stopped Victoria from investing in one of the province’s largest industries.
On Thursday, the provincial Liberals announced a new round of royalty credits to spark development in northeast B.C.’s expanding shale gas sector.
The royalty credit program totals $120 million, and the province has said it will start accepting applications from companies who want to invest in new or upgraded roads and pipelines.
Businesses still need to fund the entire cost of the infrastructure investment, but approved projects will then be able to recover up to 50% of the costs through credits that reduce the royalties companies pay to government.
The province has said the only projects that will be approved are ones that offer the ěhighest economic benefits for British Columbia.î
Victoria has also emphasized job creation.
"We’ve been very successful at leveraging investor capital to generate additional royalty revenue for the province," Energy Minister Steve Thomson said in a release. "Not only does the program help create more year-round jobs, it results in higher revenues that fund critical programs like education and healthcare."
The province said the program was originally set up in 2004 and has led to the development of 76 road-based projects and 97 pipelines, which account for more than $1 billion in capital investment.
This year’s program is expected to generate some $240 million in new industry capital spending.
But the program comes at a time when natural gas prices are dropping due to a plethora of shale gas finds throughout the southern and eastern U.S., as well as Western Canada.
At press time, natural gas prices were up $0.02 to $3.87 per million btu’s, that’s compared with $4.69 on January 20.
Still, Asia remains keen on B.C.’s gas resources.
Last week, Calgary-based natural gas giant Encana Corp. (TSX:ECA) signed a $5.5 billion agreement to sell 50% of its Cutbank Ridge assets in B.C. and Alberta to PetroChina Company Ltd.