Transcript Slide 1

Overview of
British Columbia’s
Infrastructure Royalty Credit
Program
TOPICS
1. BC's Oil and Gas Resources, Competitiveness
and Royalty Programs
2. BC's Infrastructure Royalty Credit Program
•
Objectives
•
Requirements
•
Results
•
Current Instalment
1
British Columbia is abundant
with oil and gas resources
•
Natural Gas = 90% - 95% of royalties
•
Activity focused in Northeast BC –
Western Canada Sedimentary Basin
•
Conventional Resources
-
•
2
91 Tcf GIP estimate
Shift to unconventional resources
-
Tight Gas = >300 Tcf GIP estimate*
-
Shale Gas = >500 Tcf GIP estimate*
British Columbia’s Strategy for
Oil and Gas Development
•
Natural Gas Strategy
Outlines BC’s vision for becoming a global leader in secure and
sustainable natural gas investment, development and export.
www.gov.bc.ca/ener/popt/down/natural_gas_strategy.pdf
•
Liquefied Natural Gas Strategy
Details BC’s commitment to LNG exports, and outlines the principles
that will guide the delivery of this new industry.
www.gov.bc.ca/ener/popt/down/liquefied_natural_gas_strategy.pdf
•
BC monitors its competitive position every two years.
•
BC is responsive to market changes.
3
British Columbia has a competitive royalty
framework, with royalties targeted to resource
British Columbia Targeted Royalty Programs
Deep Royalty
Programs
• Deep
• Deep Discovery
• Deep Re-entry
Conditions:
• Vertical Well Depth
> 2500m
• Before Sep 1, 2009
Horizontal Well
Depth > 2300m
• After Sep 1, 2009
Horizontal Well
Depth > 1900m
Marginal
Royalty
Program
Ultra-Marginal
Royalty
Program
Coalbed
Methane
Conditions:
Condition:
Condition:
• 12 month average
Rate < 80 mcf/d/100m
• 12 month
average Rate <
40 mcf/d/100m
• Production <
600
mcf/d
Infrastructure
Royalty
Credit
Program
Net Profit
Royalty
Program
Condition:
Conditions:
• By Request for
Applications
• By Request for
Applications
• Monthly Production
below 880 mcf/d
Programs provide reduced royalty rates
Programs provide credits
4
British Columbia Targeted Royalty Programs
•
These programs can be combined in many cases, thus providing enough
margin to move certain projects to economic territory.
•
Example - a well that…
– is associated with a road project (an infrastructure credit);
– is deep; and
– is marginal…
•
…can receive all the associated benefits for those programs.
5
TOPICS
1. BC's Oil and Gas Resources, Competitiveness
and Royalty Programs
2. BC's Infrastructure Royalty Credit Program
•
Objectives
•
Requirements
•
Results
•
Current Instalment
6
Program Objectives
Program awards royalty credits to oil and gas companies who invest in new
oil and gas roads and pipeline projects in BC.
Designed to enable investment in oil and gas infrastructure and improve year
round access to oil and gas resources in northeast BC.
Facilitates new capital investment, job growth in northern communities, and
new incremental revenue to the Crown, which would not otherwise occur.
Identified in the 2012 BC Natural Gas Strategy as an important means to
demonstrate BC’s commitment to investment competitiveness by enhancing
industry capital planning and investment in emerging or under-explored areas.
7
Program Requirements
Road and pipeline projects are received and evaluated through a competitive
Request for Applications (RFA) process.
Approved projects are selected according to their potential to generate future
royalties and ability to open up new areas to oil and gas exploration.
Companies are required to fund the entire cost of an approved infrastructure
project (and complete it) before they can apply for a deduction to the royalties
they would otherwise pay to the province.
This deduction can be as much as 50% of the total road and/or pipeline project
cost of constructing the approved project.
Approved projects must be completed within 3 years from the date which the
Agreement was signed.
8
Program Results
Since 2004, eleven program instalments have resulted in over 200 all-season
roads and/or new pipeline projects in BC.
Leveraged $1.9 billion in industry capital investments in oil and gas infrastructure,
and over $5 billion in well drilling and completion investment.
Generated new job and business opportunities in northeast BC.
One of the successes of the Program is measured by the net incremental oil and
gas royalty revenues generated to the Province that are directly associated with
the projects approved under the Program.
Return on investment from each instalment grows over time as the wells drilled
continue to produce and new wells are developed because the new road or
pipeline infrastructure is in place.
9
Current Instalment of the Program
Given the success of the Program, the Province approved a new
$120 million allocation in infrastructure royalty credits for the 2014 Program.
The $120 million allocation is the maximum amount of infrastructure royalty
credits available.
The RFA for the 2014 Program began on February 25, 2014 and will close on
April 16, 2014.
All of the RFA documents and templates for the 2014Program as well as a new
RFA tutorial may be found at:
www.empr.gov.bc.ca/OG/oilandgas/royalties/infdevcredit/Pages/default.aspx
10
For more information, please visit our website at:
www.em.gov.bc.ca/OG/oilandgas/royalties/infdevcredit/Pages/default.aspx