Maintaining Momentum in B.C.’s Oil and Gas Sector 

Our industry has a strong track record of responsible development in B.C. We strongly encourage policies that strike a balance between energy development, environmental performance and economic growth.

Maintaining Momentum in B.C.’s Oil and Gas Sector

By David Collyer, President, Canadian Association of Petroleum Producers

May 7, 2009

Responsible development of British Columbia’s crude oil and natural gas resources is extremely important to B.C.’s economic well-being and to its economic recovery. The industry has invested almost $30 billion dollars in British Columbia over the last eight years, resulting in 34,000 direct and indirect jobs.  It generated almost $2.4 billion in provincial revenues in 2007 -  revenues that are available to support education, health care and other provincial services.

British Columbia

Through its policies, B.C. has established the conditions to ensure it has positioned its natural gas resource to be competitive in the North American market place. In particular, targeted regulatory and fiscal measures have been very successful in  attracting investment that would not otherwise occur and ensuring a sustained and growing revenue stream for the province.  The industry is poised for significant growth in the medium to long term once commodity prices normalize. Indeed the industry spent $2.6 billion to acquire oil and gas mineral rights in 2008.  This is a leading indicator for further investment and an important measure of industry’s confidence in the province’s commitment to maintaining a competitive environment in which to do business. 

Of course we recognize the need to pursue this development in a responsible way.  The industry has a strong track record in this regard in B.C. and we are committed to further improvement in environmental performance.

We firmly believe that industry’s activity should be guided by policies and regulations that strike the right balance among  energy development, environmental performance and economic growth. For these reasons, we were disappointed in the election platform recently advanced by the NDP, and particularly with apparent errors in its factual underpinning.

Among other things, the NDP election platform proposes a new tax on routine gas well flaring. The policy intent appears to be to both reduce flaring and the associated emissions and to generate approximately $400 million in revenues. Specifically, the platform states: “Our plan ends the routine gas well flaring that accounts for 13% of B.C.’s greenhouse gas emissions.” Subsequent clarification of the platform refers to “fugitive gases” as the intended target of this policy. At CAPP we think it is important to set the record straight on the facts with respect to our industry’s emissions and on the need for this specific tax measure.

Regarding the facts, actual emissions from these sources accounted for between 1 and 2 % of BC’s GHG emissions, rather than the 13 % noted in the platform (according to statistics from the B.C. Oil and Gas Commission).  It is also relevant to note  that B.C. producers are already subject to stringent requirements for managing and reducing emissions through the Commission’s “Flaring, Incinerating and Venting Guideline for British Columbia”.  Consequently, the industry now conserves 96% of all solution gas. This reflects a combined effort by industry and the B.C. Oil and Gas Commission, and aligns with the objective already in place under the B.C. Energy Plan to eliminate routine solution gas flaring.  In our view, existing regulatory measures have already made significant progress in reducing these emissions.  Imposing a new tax burden is unnecessary, would erode the competitive position of the Province, and would not provide the revenue stream represented in the NDP election platform.

Through development of its abundant natural gas resources, B.C. can also play a significant role on a continental basis in contributing to reductions in greenhouse gases.  This is a relatively clean burning fuel that can be used as an alternative to more carbon-intensive fuels such as those used in power generation in North America.  The Province has already indicated through its Climate Action Plan that measures need to be taken to minimize GHG emissions. The oil and gas industry is working with the Province on measures which include Carbon Capture and Sequestration, energy efficiency (including flaring reduction) and clean electric power use to minimize emissions from production sources. B.C. has also moved to set a price on carbon.  CAPP agrees that carbon needs to be priced and that this price should be applied broadly across the economy.  The dialogue on climate change policy is evolving in North America. CAPP believes this dialogue needs to be guided by principles that speak to fairness, efficiency and competitiveness.

In summary, B.C. has benefited in many respects from the growth in the oil and gas sector over the past few years. To maintain that momentum and realize future growth opportunities, we strongly encourage the continuation of policies that strike the right balance between energy development, environmental performance and economic growth.

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British Columbia is Canada's second largest natural gas producer.

British Columbia's Industry

Science and Community Environmental Knowledge Fund

In 1998, the Government of British Columbia entered into an agreement with the Canadian Association of Petroleum Producers (CAPP) and the Small Explorers and Producers Association of Canada (SEPAC) to establish the Environment Fund (the Fund), which would be administered by the Oil and Gas Commission (OGC). The Fund was allocated $5 million over five years to support studies concerning practical ways of addressing environmental issues related to oil and gas exploration and development in British Columbia.

In 2002, CAPP and SEPAC restated their support of the Fund for a total of $9 million. They also agreed to refocus and rename the Fund, changing it from a purely research-based, environment fund to a broader based fund which incorporates science and community environmental knowledge-thus the new name Science and Community Environmental Knowledge Fund (SCEK Fund).

The purpose of the SCEK Fund (the Fund), as stated in the March 24, 2005, agreement between the founding parties, is to support and facilitate research concerning practical ways of addressing environmental issues related to oil and gas exploration in British Columbia. This fund does not replicate research that is the responsibility of government.

Study findings will be incorporated, where appropriate, into practices and regulations.Science and Community Environmental Knowledge Fund