B.C. oil and gas rights sales net record $2.4B
British Columbia netted a record $2.4 billion in oil and gas land rights sales for the 2008-09 fiscal year, which is double last year's haul, the provincial government said Thursday
The annual total beat last year's previous record-breaking sum of $1.2 billion and underscores the "unprecedented growth" of B.C.'s energy sector, according to a statement released by the government Thursday morning.
It said 190 land parcels totalling 247,227 hectares were sold in the April-March period. March sales alone amounted to $15 million.
The Horn River Basin and Montney shale formation areas in northeastern B.C. accounted for 80 per cent of the 2008-09 sales, the province said.
Canadian firms EnCana, Nexen, Talisman Energy and Canadian Natural Resources have big land positions in northeast B.C., as well as U.S. companies EOG Resources and Apache where the Horn River and Montney area are believed to hold huge amounts of natural gas, but technology has only recently been developed to tap into the hard-to-access resource.
B.C. said it is the only "significant jurisdiction in Canada" and only one of two in North America that has seen oil and gas rig activity increase in January and February this year compared to last year.
That said, February's oil and gas land rights sale netted the lowest per-hectare price in more than a year, a sign of a slowdown in the industry in the current recessionary economy.
B.C.'s energy industry thriving
While the record-setting pace of sales may not continue, B.C. Energy Minister Blair Lekstrom believes the industry will continue to thrive in the province.
"I am not sure we will experience the same type of slowdown others may," he said, pointing to government incentive programs for the industry as a reason.
Earlier this month, B.C. said it is providing $187 million in funding over four years to upgrade the Sierra Yoyo Desan Road to access the Horn River Basin. It said the move will create more than 1,150 direct jobs.
Lekstrom said the province will see a return in the billions on that investment, and it will also make the road safer for drivers.
B.C. also has a Net Profit Royalty program to stimulate the development of natural gas and oil resources in the province.
The province said industry investment for 2008 is estimated at $8 billion, almost three times the investment in 2001.
Lekstrom said the revenue from the land rights sales is spread out over eight years, in accordance with accounting rules, and that the money goes into a consolidation fund used towards everything from health care and education to infrastructure.
Critics have said profiting from the sale of oil and gas rights conflicts with the B.C. government's stated goals of reducing B.C.'s greenhouse gas emissions by one-third from 2007 levels by 2020.