BC introduces new royalty-reduction program for oil and gas development

Oil and gas companies involved in unconventional resource development could get a hand up from the provincial government through a new program planned for implementation sometime next year.

Speaking at the Oil and Gas conference yesterday, Nick Crisp of the Ministry of Energy and Mines explained that the new program, called the Net Profit Royalty Program, will subsidize high cost and high risk developments in the sector by reducing royalty rates during the initial stages of production.

Once projects have recovered their capital investments, companies will pay higher royalty rates to compensate for the lower initial rates.

The province hopes that through the program BC will be able to enjoy the economic benefits of developments which would not have otherwise been economic for companies to attempt.

The province has put out a Request for Information from companies that may be interested in the program, but Crisp says no specific date for implementation has yet been set.