An oil and gas stimulus package announced by Minister of Energy, Mines and Petroleum Resources Blair Lekstrom Thursday further fuels competition between British Columbia and Alberta, Canada's top natural gas producers. When British Columbia announced in March that it had extended its 2004 program of royalty discounts, Alberta followed up with its own incentives the following day.

"In this day and age, capital investment is very fluid and we want to encourage the oil and gas sector to invest in British Columbia," Lekstrom said in a statement Thursday.

Four royalty-based incentives and two regulatory changes are included in the stimulus package, aimed at getting more gas flowing. Additional royalties collected by the government will help to offset British Columbia's $500 million revenue shortfall.

Beginning in September and extending through June 2010, all wells drilled in British Columbia will enjoy a royalty rate of 2 percent for the first year of production.

Deep well developing also gets a boost from the new package. Natural gas deep drilling will benefit from a 15 percent royalty deduction, and the definition of deep gas royalty credits will expand to include more shallow regions of 6,248 to 7,546 feet underground.

In addition, British Columbia is increasing its existing $120 million infrastructure royalty credit program by $50 million to encourage development of oil and gas pipelines and roadways.

While the government didn't place a monetary value on the package, it suggested that British Columbia could gain $2.50 in revenue growth from the industry for every $1 of discounted royalties.

"If you look at oil and gas activity around the world, it's taken a bit of a slowdown," Lekstrom told the Vancouver Sun. "We've managed to weather that quite well. This stimulus package is based on bringing things back to a higher level of activity."

Alberta-based EnCana, British Columbia's largest gas explorer, commended the timing of the stimulus package, noting that drillers are involved in early stages of planning for the coming exploration season, the Sun reported. The Canadian Association of Petroleum Producers, noting that British Columbia is already a competitive jurisdiction for gas exploration, said the new incentives will further attract investors.

The royalty rate competition extends beyond Canada's borders, with other natural gas basins offering incentives, including the Barnett shale in Texas and the Marcellus in Pennsylvania.

"I really do see it as more of a North American-wide commodity and competition for investment," Richard Dunn, EnCana vice president of regulatory and external relations for its Canadian Foothills division, told the Financial Post. "The Canadian jurisdictions have to be competitive."

Share This Article With Planet Earth

del.icio.us	Digg	Reddit
YahooMyWeb	Google	Facebook

Related Links
Powering The World in the 21st Century at Energy-Daily.com

Memory Foam Mattress Review

SPACE MEDIA NETWORK PROMOTIONS Solar Energy Solutions Tempur-Pedic Mattress Comparison ... Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News