OIL AND GAS

Be Among the Most Competitive Oil and Gas Jurisdictions in North America

Since 2001, British Columbia's oil and gas sector has grown to become a major force in our provincial economy, employing tens of thousands of British Columbians and helping to fuel the province's strong economic performance. In fact, investment in the oil and gas sector was $4.6 billion in 2005. The oil and gas industry contributes approximately $1.95 billion annually or seven per cent of the province's annual revenues.

Policy Actions

Environmentally Responsible Oil and Gas Development

  • Eliminate all routine flaring at oil and gas producing wells and production facilities by 2016 with an interim goal to reduce flaring by half (50 per cent) by 2011.
  • Establish policies and measures to reduce air emissions in coordination with the Ministry of Environment.
  • Best coalbed gas practices in North America. Companies will not be allowed to surface discharge produced water. Any re-injected produced water must be injected well below any domestic water aquifer.
  • Enhance the Oil and Gas Environmental Stewardship Program, ensuring sound environmental, land and resource management.

The BC Energy Plan is designed to take B.C.'s oil and gas sector to the next level to enhance a sustainable, thriving and vibrant oil and gas sector in British Columbia. With a healthy, competitive oil and gas sector comes the opportunity to create jobs and build vibrant communities with increased infrastructure and services, such as schools and hospitals. Of particular importance is an expanding British Columbia-based service sector.

There is a lively debate about the peak of the world's oil and gas production and the impacts on economies, businesses and consumers. A number of countries, such as the UK, Norway and the USA, are experiencing declining fossil fuel production from conventional sources. Energy prices, especially oil prices have increased and are more volatile than in the past. As a result, the way energy is produced and consumed will change, particularly in developed countries.

The plan is aimed at enhancing the development of conventional resources and stimulating activity in relatively undeveloped areas such as the interior basins — particularly the Nechako Basin. It will also foster the development of unconventional resources such as as tight gas, shale gas, and coalbed gas. The plan will further efforts to work with the federal government, communities and First Nations to advance offshore opportunities.

The challenge for British Columbia in the future will be to continue to find the right balance of economic, environmental and social priorities to allow the oil and gas sector to succeed, while protecting our environment and improving our quality of life.

The New Relationship and Oil and Gas

Working together with local communities and First Nations, the provincial government will continue to share in the many benefits and opportunities created through the development of British Columbia's oil and gas resources.

Government is working to ensure that oil and gas resource management includes First Nations' interests, knowledge and values. Government has recently concluded consultation agreements for oil and gas resource development with First Nations in Northeast British Columbia. These agreements increase clarity in the process and will go a long way to enhancing our engagement with these First Nations.

Government will continue to pursue opportunities to share information and look for opportunities to facilitate First Nations' employment and participation in the oil and gas industry to ensure that Aboriginal people benefit from the continued growth and development of British Columbia's resources.

While striving to be among the most competitive oil and gas jurisdictions in North America, the province will focus on maintaining and enhancing its strong competitive environment for the oil and gas industry. This encompasses the following components:

  • A competitive investment climate.
  • An abundant resource endowment.
  • Environmental responsibility.
  • Social responsibility.

The BC Energy Plan adopts a triple bottom line approach to competitiveness, with an attractive investment climate, environmentally sustainable development of B.C.'s abundant resources, and by benefiting communities and First Nations.

Leading in Environmentally and Socially Responsible Oil and Gas Development

British Columbia Companies Recognized As World Energy Technology Innovators

The leadership of British Columbian companies can be seen in all areas of the energy sector through innovative, industry leading technologies.

Production of a new generation of chemical injection pump for use in the oil and gas industry is beginning. The pumps, developed and built in British Columbia, are the first solar powered precision injection pumps available to the industry. They will reduce emissions by replacing traditional gas powered injection systems for pipelines.

Other solar technologies developed in British Columbia provide modular power supplies in remote locations all over the globe for marine signals, aviation lights and road signs.

Roads in B.C. and around the world are hosting demonstrations of fuel cell vehicles built with British Columbia technology. Thanks to the first high pressure hydrogen fuelling station in the world, compatible fuel cell vehicles in B.C. can carry more fuel and travel farther than ever before.

The Innovative Clean Energy Fund will help to build B.C.'s technology cluster and keep us at the forefront of energy technology development.

The BC Energy Plan emphasizes conservation, energy efficiency, and the environmental and socially responsible management of the province's energy resources. It outlines government's efforts to meet this objective by working collaboratively with involved and interested parties, including affected communities, landowners, environmental groups, First Nations, the regulator (the Oil and Gas Commission), industry groups and others. Policy actions will support ways to address air emissions, impacts on land and wildlife habitat, and water quality.

The oil and gas sector in British Columbia accounts for approximately 18 per cent of greenhouse gas air emissions in the province. The main sources of air emissions from the oil and gas sector are flaring, fugitive gases, gas processing and compressor stations. While these air emissions have long been part of the oil and gas sector, they have also been a source of major concern for oil and gas communities.

Eliminate Flaring from Oil and Gas Producing Wells and Production Facilities By 2016

Through The BC Energy Plan, government has committed to eliminate all routine flaring at oil and gas producing wells and production facilities by 2016 with an interim goal to reduce flaring by half (50 per cent) by 2011. In addition, government will adopt policies to reduce natural gas flaring and venting at test sites and pipelines, and encourage compressor station efficiency to cut back emissions. Government will also explore opportunities and new technologies for safe, underground disposal of carbon dioxide or sequestration from oil and gas facilities. Sequestration is considered a cost effective mitigation strategy in reducing carbon dioxide emissions.

Enhance Carbon Dioxide Sequestration in British Columbia

British Columbia is a member of the Plains CO2 Reduction (PCOR) Partnership composed of nearly 50 private and public sector groups from nine states and three Canadian provinces that is assessing the technical and economic feasibility of capturing and storing carbon dioxide emissions from stationary sources in western sedimentary basins.

B.C. is also a member of the West Coast Regional Carbon Sequestration Partnership, made up of west coast state and provincial government ministries and agencies. This partnership has been formed to pursue carbon sequestration opportunities and technologies.

To facilitate and foster innovation in sequestration, government will develop market oriented requirements with a graduated schedule. In consultation with stakeholders, a timetable will be developed along with increasing requirements for sequestration.

Government will work to improve oil and gas tenure policies as well as develop new guidelines to determine areas that require special consideration prior to tenure approval.

Environmental Stewardship Program

In 2004, the Ministry of Energy, Mines and Petroleum Resources initiated the Oil and Gas Environmental Stewardship Program having two components: the Environmental Policy Program and the Environmental Resource Information Project. The Environmental Policy Program identifies and mitigates environmental issues in the petroleum sector focusing on policy development in areas such as environmental waste management, habitat enhancement, planning initiatives, wildlife studies for oil and gas priority areas and government best management practices. Some key program achievements include the completion of guidelines for regulatory dispersion modeling, research leading to the development of soil quality guidelines for soluble barium, a key to northern grasses and their restorative properties for remediated well sites, and moose and caribou inventories in Northeast British Columbia.

The Environmental Resource Information Project is dedicated to increasing opportunities for oil and gas development, through the collection of necessary environmental baseline information. These projects are delivered in partnership with other agencies, industry, communities and First Nations.

The BC Energy Plan enhances the important Oil and Gas Environmental Stewardship Program. This will improve existing efforts to manage waste and preserve habitat, and will establish baseline data as well as development and risk mitigation plans for environmentally sensitive areas. Barriers need to be identified and steps taken for remediation, progressive reclamation, and waste management.

Policy Actions

OFFSHORE OIL AND GAS DEVELOPMENT

  • Continue to work to lift the federal moratorium on offshore exploration and development and reiterate the intention to simultaneously lift the provincial moratorium.
  • Work with the federal government to ensure that offshore oil and gas resources are developed in a scientifically sound and environmentally responsible way.
  • Participate in marine and environmental planning to effectively manage marine areas and offshore oil and gas basins.
  • Develop and implement a comprehensive community engagement program to establish a framework for a benefits sharing agreement resulting from offshore oil and gas development for communities, including First Nations.

Best Coalbed Gas Practices in North America

Government will continue to encourage coalbed gas development with the intent of demonstrating that British Columbia is a leading socially and environmentally responsible coalbed gas developing jurisdiction. Coalbed gas, also known as coalbed methane, is natural gas found in coal seams. It is one of the cleanest burning of all fossil fuels. Proponents wanting to develop coalbed gas must adopt the following best practices:

  • Fully engage local communities and First Nations in all stages of development.
  • Use the most advanced technology and practices that are commercially viable to minimize land and aesthetic disturbances.
  • Companies will not be allowed to surface discharge produced water. Any re-injected produced water must be injected well below any domestic water aquifer.
  • Meet any other conditions the Oil and Gas Commission may apply.
  • Demonstrate the company's previous experience with coalbed gas development, and information must be made publicly available as to how the company plans to meet and be accountable for these best practices.

Ensuring Offshore Oil and Gas Resources are Developed in a Scientifically Sound and Environmentally Responsible Way

The BC Energy Plan includes actions related to the province's offshore oil and gas resources. Since 1972, Canada and British Columbia have each had a moratorium in place on offshore oil and gas exploration and development. With advanced technology and positive experiences in other jurisdictions, a compelling case exists for assessing British Columbia's offshore resource potential.

Government will work with coastal communities, First Nations, the federal government, environmental organizations, and others to ascertain the benefits and address the concerns associated with offshore oil and gas development.

British Columbia's oil and gas industry supports thousands of well-paying jobs, helps drive the economy and provides revenues to sustain public services.

Maintaining B.C.'s Competitive Advantage as an Oil and Gas Jurisdiction

British Columbia's oil and gas industry is thriving thanks to high resource potential, industry and service sector expertise, and a competitive investment climate that includes a streamlined regulatory environment. To attract additional investment in British Columbia's oil and gas industry, we need to compete aggressively with other jurisdictions that may offer lower taxes or other investment incentives.

Another key way to be more competitive is by spurring activity in underdeveloped areas while heightening activity in the northeast, where our natural gas industry thrives. The province will work with industry to develop new policies and technologies for enhanced resource recovery making it more cost-effective to develop British Columbia's resources.

By increasing our competitiveness, British Columbians can continue to benefit from well-paying jobs, high quality social infrastructure and a thriving economy.

Link to Larger Version - Map - BC Oil and Gas Undiscovered Resource Estimates LINK TO LARGER VERSION

Neemac: Success Through Communication

As energy, mining and petroleum resource development increases in northeast B.C., so too does the need for input from local governments, First Nations, community groups, landowners and other key stakeholders. In 2006, the Northeast Energy and Mines Advisory Committee (NEEMAC) was created to provide an inclusive forum for representative organizations to build relationships with each other, industry and government to provide input on Ministry policy, and recommend innovative solutions to stakeholder concerns.

Since its creation, NEEMAC has identified and explored priority concerns, and is beginning to find balanced solutions related to environmental, surface disturbance, access and landowner rights issues. The Ministry is committed to implementing recommendations that represent the broad interests of community, industry and government and expects that the committee will continue to provide advice on energy, mining and petroleum development issues in support of The BC Energy Plan.

British Columbia's Enormous Natural Gas Potential

The oil and gas sector will continue to play an important role in British Columbia's future energy security. Our province has enormous natural gas resource potential and opportunities for significant growth. The BC Energy Plan facilitates the development of B.C.'s resources.

British Columbia has numerous sedimentary basins, which contain petroleum and natural gas resources. In north-eastern British Columbia, the Western Canada Sedimentary Basin is the focus of our thriving natural gas industry. The potential resources in the central and northern interior of the province, the Nechako and Bowser Basins and Whitehorse Trough, have gone untapped.

The delayed evaluation and potential development of these areas is largely due to geological and physical obstructions that make it difficult to explore in the area. Volcanic rocks that overlay the sedimentary package combined with complex basin structures, have hindered development.

The BC Energy Plan is aimed at enhancing the development of conventional resources and stimulating activity in undeveloped areas such as the interior basins — particularly the Nechako Basin. It will also foster the development of unconventional resources and take a more stringent approach on coalbed gas to meet higher environmental standards.

An opportunity to increase competitiveness exists in British Columbia's Interior Basins — namely the Nechako, Bowser and Whitehorse Basins — where considerable resource potential is known to exist.

Attracting Investment and Developing our Oil and Gas Resources

The BC Energy Plan promotes competitiveness by setting out a number of important regulatory and fiscal measures including: monitoring British Columbia's competitive ranking, considering a Net Profit Royalty Program, promoting a B.C. service sector, harmonizing and streamlining regulations, and developing a Petroleum Registry to examine royalty and tenure incentives, and undertaking geoscience programs.

Establishment of a Petroleum Registry

The establishment of a petroleum registry that functions as a central database will improve the quality and management of key volumetric, royalty and infrastructure information associated with British Columbia's oil and gas industry and promote competition while providing transparency around oil and gas activity.

The hub of B.C.'s
oil and gas sector

Oil and gas is benefiting all British Columbians — not just those living in major centres. Nowhere is this more apparent than in booming Fort St. John, which has rapidly become the oil and gas hub of the province. Since 2001, more than 1,400 people have moved to the community, an increase of 6.3 per cent and two per cent faster growth than the provincial average. Construction permits are way up — from $48.7 million in 2004, to $50.6 million in 2005, to over $123 million in 2006. In the past five years, over 1,000 new companies have been incorporated in Fort St. John, as young families, experienced professionals, skilled trades-people and many others move here from across the country.

Increasing Access

In addition to regulatory and fiscal mechanisms, the plan addresses the need for improving access to resources. Pipelines and road infrastructure are critical factors in development and competitiveness. The BC Energy Plan calls for new investment in public roads and other infrastructure. It will see government establish a clear, structured infrastructure royalty program, combining road and pipeline initiatives and increasing development in under-explored areas that have little or no existing infrastructure.

Developing Conventional and Unconventional Oil and Gas Resources

To support investment in exploration, The BC Energy Plan calls for partnerships in research and development to establish reliable regional data, as well as royalty and tenure incentives. The goal is to attract investment, create well-paying jobs, boost the regional economy and produce economic benefits for all British Columbians. We can be more competitive by spurring activity in underdeveloped areas while heightening activity in the northeast where our natural gas industry thrives. The plan advocates working with industry to develop new policies and technology to enhance resource recovery, including oil in British Columbia.

Improve Regulations and Research

The province remains committed to continuous improvement in the regulatory regime and environmental management of conventional and unconventional oil and gas resources. The opportunities for enhancing exploration and production of tight gas, shale gas, and coalbed gas will also be assessed and supported by geoscience research and programs. The BC Energy Plan calls for collaboration with other government ministries, agencies, industry, communities and First Nations to develop the oil and gas resources in British Columbia.

Focus on Innovation and Technology Development

The BC Energy Plan also calls for supporting the development of new oil and gas technologies. This plan will lead British Columbia to become an internationally recognized centre for technological advancements and commercialization, particularly in environmental management, flaring, carbon sequestration and hydrogeology. The service sector has noted it can play an important role in developing and commercializing new technologies; however, the issue for companies is accessing the necessary funds.

Policy Actions

BE AMONG THE MOST COMPETITIVE OIL AND GAS JURISDICTIONS IN NORTH AMERICA

  • Pursue regulatory and fiscal competitiveness in support of being among the most competitive oil and gas jurisdictions in North America.
  • Enhance infrastructure to support the development of oil and gas in British Columbia and address impediments to economic development such as transportation and labour shortages.
  • Encourage the development of conventional and unconventional resources.
  • Support the growth of British Columbia's oil and gas service sector.
  • Promote exploration and development of the Interior basins with a priority focus on the Nechako Basin.
  • Encourage the development of new technologies.
  • Add value to British Columbia's oil and gas industry by assessing and promoting the development of additional gas processing facilities in the province.

Technology Transfer Incentive Program

A new Oil and Gas Technology Transfer Incentive Program will be considered to encourage the research, development and use of innovative technologies to increase recoveries from existing reserves and encourage responsible development of new oil and gas reserves. The program could recover program costs over time through increased royalties generated by expanded development and production of British Columbia's petroleum resources.

Scientific Research and Experimental Development

The BC Energy Plan supports the British Columbia Scientific Research and Experimental Development Program, which provides financial support for research and development leading to new or improved products and processes. Through credits or refunds, the expanded program could cover project costs directly related to commercially applicable research, and development or demonstration of new or improved technologies conducted in British Columbia that facilitate expanded oil and gas production.

Research and Development

The BC Energy Plan calls for using new or existing research and development programs for the oil and gas sector. Government will develop a program targeting areas in which British Columbia has an advantage such as well completion technology and hydrogeology.

A program to encourage oil and gas innovation and research in British Columbia's post-secondary institutions will be explored. These opportunities will be explored in partnership with the Petroleum Technology Alliance Canada and as part of the April 2006 Memorandum of Understanding between British Columbia and Alberta on Energy Research, Technology Development and Innovation.

Together with the Oil and Gas Centre of Excellence in Fort St. John, an oil and gas technology incubator, a site which provides innovators with space to build prototypes and carry out testing as well as providing business infrastructure and assistance accessing additional support will be established, allowing entrepreneurs to develop and test new innovations and commercialize new, innovative technologies and processes.

By increasing our oil and gas industry's competitiveness, British Columbians can continue to benefit from well-paying jobs, high quality social infrastructure and a thriving economy.

Nechako Initiative

The BC Energy Plan calls for government to partner with industry, the federal government, and Geoscience BC to undertake comprehensive research in the Nechako Basin and establish new data of the resource potential. It will include active engagement of communities and the development and implementation of a comprehensive pre-tenure engagement initiative for First Nations in the region. Specific tenures and royalties will be explored to encourage investment, as well as a comprehensive Environmental Information Program to identify baseline information needs in the area through consultations with government, industry, communities and First Nations.

Value-Added Opportunities

To improve competitiveness, The BC Energy Plan calls for a review of value-added opportunities in British Columbia. This will include a thorough assessment of the potential for processing facilities and petroleum refineries as well as petrochemical industry opportunities. The Ministry of Energy, Mines and Petroleum Resources will conduct an analysis to identify and address barriers and explore incentives required to encourage investment in gas processing in British Columbia. A working group of industry and government will develop business cases and report to the Minister by January 2008 with recommendations on the viability of a new petroleum refinery and petrochemical industry and measures, if any, to encourage investment.

Oil and Gas Service Sector

British Columbia's oil and gas service sector can also help establish our province as one of the most competitive jurisdictions in North America. The service sector has grown over the past four years and with increased activity, additional summer drilling, and the security of supply, opportunities for local companies will continue. Government can help maximize the benefits derived from the service sector by:

  • Promoting British Columbia's service sector to the oil and gas industry through participation at trade shows and providing information to the business community.
  • Identifying areas where British Columbian companies can play a larger role, expand into other provinces, and through procurement strategies.

The government also supports the Oil and Gas Centre of Excellence at the Fort St. John Northern Lights College campus, which will provide oil and gas, related vocational, trades, career and technical programs.

Improving Oil and Gas Tenures

Government will work to improve oil and gas tenure issuance policies as well as develop new guidelines to determine areas that require special consideration prior to tenure approval by the end of 2007. This will provide clear parameters for industry regarding areas where special or enhanced management practices are required. These measures will strike the important balance between providing industry with clarity and access to resources and the desire of local government, communities, landowners, stakeholders and First Nations for input into the oil and gas development process.

Together with the Oil and Gas Centre of Excellence in Fort St. John, an oil and gas technology incubator will be established, allowing entrepreneurs to develop and test new innovations.

Create Opportunities for Communities and First Nations

Benefits for British Columbians from the Oil and Gas Sector

The oil and gas sector offers enormous benefits to all British Columbians through enhanced energy security, tens of thousands of good, well-paying jobs and tax revenues used to help fund our hospitals and schools. However, the day-to-day impact of the sector has largely been felt on communities and First Nations in British Columbia's northeast. Community organizations, First Nations, and landowners have communicated a desire for greater input into the pace and scope of oil and gas development in British Columbia.

Policy Actions

Working With Communities and First Nations

  • Provide information about local oil and gas activities to local governments, First Nations, education and health service providers to inform and support the development of necessary social infrastructure.
  • Work with First Nations to identify opportunities to participate in and benefit from oil and gas development.
  • Support First Nations in providing cross-cultural training to agencies and industry.
  • Improve working relationships among industry and local communities and landowners by clarifying and simplifying processes, enhancing dispute resolution methods, and offering more support and information.
  • Examine oil and gas tenure policies and develop guidelines to determine areas that require special consideration prior to tenure approval.

Through The BC Energy Plan, government intends to develop stronger relationships with those affected by oil and gas development, including communities and First Nations. The aim is to work cooperatively to maximize benefits and minimize impacts. The plan supports improved working relationships among industry, local communities and landowners by increased and improved communication to clarify and simplify processes, enhancing dispute resolution methods, and offering more support and information.

The government will also continue to improve communications with local governments and agencies. Specifically, The BC Energy Plan calls for efforts to provide information about increased local oil and gas activities to local governments, education and health service providers to improve their ability to make timely decisions on infrastructure, such as schools, housing, and health and recreational facilities. By providing local communities and service providers with regular reports of trends and industry activities, they can more effectively plan for growth in required services and infrastructure.

Building Better Relationships with Landowners

The BC Energy Plan: A Vision for Clean Energy Leadership also supports improved working relationships between industry, local communities and landowners and First Nations. Landowners will be notified in a more timely way of sales of oil and gas rights on private land. Plain language information materials, including standardized lease agreements will be made available to help landowners deal with subsurface tenures and activity. There will be a review of the dispute resolution process between landowners and industry by the end of 2007. The existing setback requirements, the allowed distance of a well site from a residence, school or other public place, will also be examined. These measures seek to strike the important balance between providing industry with clarity and access to resources and the desire of local government, communities, landowners, stakeholders and First Nations for input into oil and gas development.

Working in Partnership with First Nations and Communities

Government will work with First Nations communities to identify opportunities to benefit from oil and gas development. By developing a greater ability to participate in and benefit from oil and gas development, First Nations can play a much more active role in the industry. The BC Energy Plan also supports increasing First Nations role in the development of cross-cultural training initiatives for agencies and industry.

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