“Thank you for the opportunity to provide a submission in support of the continued growth and development of British Columbia’s natural gas and liquefied natural gas industry (LNG). Responsible natural resource development is B.C.’s competitive advantage.  We grow, develop, and produce what the world needs – and we do it well, with some of the planet’s most innovative and sustainable processes. Our leadership and commitment to protecting our environment has proven we can develop our resources sustainably, while growing our economy to become one of Canada’s strongest.

This review comes at a time when the world is facing an energy crisis that threatens our global economic recovery. A lack of investment in the development of natural gas and oil has constrained supply, causing a sharp increase in prices, and some countries to revert to coal to meet their energy needs. We need to reduce emissions – but the world also needs reliable and affordable energy – denying this reality won’t help us reach our environmental ambitions. 

The government’s discussion paper states higher rates that will impact investment in the production of natural gas may reduce provincial emissions, but it will not alter the demand base for the energy source.  The natural gas we produce in B.C. is among the cleanest in the world, and the LNG we will produce will be among the world’s most sustainable. Our commitment to environmental excellence has helped double natural gas production while absolute emissions have remained flat.

This is the type of real progress that will drive B.C. toward lasting climate solutions.

While there are those who will use this process to discount the importance of natural gas to B.C.’s economic and social ambitions, the reality is B.C.’s highest labour productivity jobs are in natural resources. One hour of employment in mining and oil and gas extraction generates nearly five times the GDP of a job in the average business sector.  Employment in natural gas and oil has more than tripled to more than 10,000 since 2001 – and with BC’s competitive advantages and a mature LNG industry – the sector has the potential to be among the province’s most significant job creators and revenue generators.

Natural gas development is a capital intense, high-skill, and high-tech industry that supports some of B.C.s highest-paying jobs. It is a fantasy to believe we can replace jobs in our most highly productive industries with jobs that generate less than half the value and still expect to meet our province’s economic, environmental, and social ambitions.

But B.C. needs to remain an attractive location for private investment and an American style, flat-rate on production – with or without a capital cost recovery mechanism – would not be suitable for BC given the relative remoteness of B.C.’s resources. A variation on royalty structure is necessary and must include sensitivity to market price variability. The goal of any royalty framework should be ensuring a fair return of the resource in all price scenarios.

Within the limits of the information provided in the discussion paper, of the three royalty structures outlined the Revenue Minus Cost (RMC) model is most likely to achieve the Government’s three objectives of the royalty framework. The discussion paper describes RMC as by far the most efficient as it eliminates differential impacts on investment and production decisions, accounts for all direct costs of production, tie royalties to the true economic value of each well, maximizing the public benefit of development. 

The royalty regime needs to be transparent and provide the public, who owns the resource, sufficient information with which to judge the effectiveness of the royalty framework. Simplicity as a goal should not be seen as a proxy for transparency or administrative feasibility. Government must balance objectives and has an obligation to maximize the benefit to the public of natural gas development, including opportunities for hundreds of B.C. communities.  

Supporting the sustainable growth of the natural gas sector is one of the most significant opportunities for B.C. to generate economic opportunities that support self-determination and reconciliation with Indigenous communities. Throughout B.C., First Nations are generating increased ownership stakes and other enterprise opportunities in natural resource development projects. These partnerships are creating prosperity and opportunity for First Nations across the province. As your government considers this review, it is imperative you consider the rights and wishes of those who want responsible resource development as equal to those who are opposed.

Ensuring a fair return on our natural resources is a delicate balance for any government – but in a world demanding increased energy and a global commitment to reduce emissions – it’s a balance we must get right.

The result of this review of should ensure B.C. remains competitive with other jurisdictions, encourages the growth of the sector, recognizes industry’s environmental progress, and respects the rights and wishes of communities who support responsible resource development.

I appreciate your consideration of my submission..” 

[your name, city, email]