Natural gas and petroleum rights sales slipping

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FORT ST. JOHN, B.C. – You can now make it five out of seven monthly sales of BC natural gas and petroleum rights this year with a bonus bids total of less than $1 million.

Fourteen of the nineteen drilling licences offered at the July sale on Wednesday were purchased, but the tender bonus posted was just over $510,000.

The most expensive one at just over $200,000 was more than double the price of any of the others and purchased by Scott Land and Lease Limited.

It paid $360 a hectare for the licence and that too was more than double the overall per hectare price of just over $115 for all the parcels sold, which covered about 4,200 hectares.

The sale left the year-to-date bonus bids total at roughly$4.8 million and increased the chances of this becoming the worst year in terms of government sales revenue in the recorded history of the Natural Gas Ministry.

That dates back to 1978, and there have only been two of the 37 calendar years prior to this one, with totals of less than $20 million, and they were 1982 at $16.7 million and last year at $18.3 million.

It took a $4.2 million dollar sale last December to dodge the record low in 2015, but this year it will take five consecutive sales averaging nearly $2.5 million dollars to dodge it again.

That may not sound like much of a challenge, but in the first seven months of this year, the Ministry has yet to record a $2 million dollar sale, and at about $685,000, the monthly average so far this year is less than one third of what would be required during the rest of the year to match the 1982 total.

The irony of all this is, while economists forecast BC is poised in 2016 for another year of respectable economic performance, it’s hitherto northeast cash cow region is on pace to produce total revenue, from natural gas and petroleum rights sales in 2015 and 2016, that is less than 10% of what it produced in 2014, and less than one and half percent of what it produced in the record bonus bids year of 2008.