Province Launches Comprehensive Royalty Review, Releases Independent Assessment
Government of BC | Ministry of Energy, Mines and Low Carbon Innovation | Thursday, October 7, 2021
The Province is launching a comprehensive review of B.C.’s decades-old oil and gas royalty system to ensure it is modernized, aligned with the government’s climate goals and provides a fair return for British Columbians.
“B.C.’s royalty system was set up decades ago, and a comprehensive review is long overdue to make sure it is serving the interests of British Columbians,” said Bruce Ralston, Minister of Energy, Mines and Low Carbon Innovation. “The review process we are launching will allow the public to have their say on a new, modernized royalty system that meets our goals for sustainable economic development.”
In his mandate letter from the Premier, Ralston was tasked with undertaking a review of B.C.’s oil and gas royalty credits to ensure they meet the Province’s goals for economic development, a fair return on our resources and environmental protection.
As part of the review, the Province is releasing an independent assessment of B.C.’s current royalty system, completed by Nancy Olewiler, director and professor in the school of public policy at Simon Fraser University, and Jennifer Winter, associate professor of economics and scientific director of the energy and environmental policy research division in the school of public policy, University of Calgary.
“I want to thank Dr. Olewiler and Dr. Winter for their independent, thorough and fact-based assessment of B.C.’s current royalty system,” Ralston said. “Government takes this situation very seriously and will work toward an overhaul of the current system that eliminates outdated, inefficient fossil-fuel subsidies and ensures British Columbians get a fair return on our resources.”
The independent assessment provides an expert review of B.C.’s royalty system, which will support the development of a discussion paper on options to establish a new, modernized system that meets B.C.’s objectives. The discussion paper will be released in November, followed by a public consultation process to seek feedback from industry, stakeholders, First Nations and interested British Columbians. The findings of the engagement will be made available in a What We Heard report. The outcomes of the royalty review will be released in February 2022.
- B.C.’s royalty system was set up nearly 30 years ago in the 1992 Petroleum and Natural Gas Royalty and Freehold Production Tax Regulation. The way natural gas is produced has changed significantly since then, as have market conditions, drilling technology and costs, and global concerns on the need to address climate change.
- The Deep Well Royalty Credit Program was created in 2003 and initially was intended to offset higher drilling and completion costs incurred by wells that are considered particularly deep. Royalty credits reduce royalties payable to the Crown when production occurs.
- To read the independent assessment, visit: https://engage.gov.bc.ca/app/uploads/sites/716/2021/10/BC-Royalty-Review-Independent-Assessment-Sep-2021.pdf
- Learn more about the Province’s Royalty Review here: https://engage.gov.bc.ca/royaltyreview
Source: BC Government News
A backgrounder is available from the source.