As natural gas prices drop, the B.C. government is increasing subsidies to encourage drilling in hard-to-reach places.
Last week the Ministry of Energy, Mines and Petroleum Resources increased funding available for royalty credits in the oil and gas sector -- from $100 million in 2008 to $120 million this year.
And today, the B.C. government announced it will spend $187 million to upgrade the Sierra Yoyo Desan Road in northeastern B.C., which would service development of the Horn River Basin, believed to be one of the world’s largest sources of natural gas.
In 2008, land lease sales there were going for $655 per acre, and the sale of six licenses that year attracted bids of more than $67 million.
Encana Corp. is one of the biggest players in the Horn River Basin, where natural gas reserves are locked up in shale rock, making them harder and more expensive to access.
Last year, an RBC analyst told the Financial Post that EnCana would need long-term gas prices of at least US$8 to obtain to cost of capital returns.
However, natural gas prices dropped 28 per cent this year. Last month, one analyst predicted the North American shale gas rush will slow to a trickle by summer, with gas prices falling below US $3 by fall.
Colleen Kimmett writes for The Tyee
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Campbellwearsatutu
3 years ago
Let me get this straight
So the infrastructure spending on the road is really a indirect subsidy to oil and gas companies.
I am not familar with that neck of the woods,how many of the general public travel that road?
I guess if you are a big business the liberal goverment will spend hundreds of millions on a road so you can access your profits, am I missing something here?
Campbellwearsatutu
3 years ago
I clicked the link and read the story
How come we,the tax-payers are paying 187 million dollars,the story goes on to say that heavy trucks have chewed up the road that we spent 65 million upgrading a few years ago.
The story goes on to say that it will create 1100 jobs in 4 years,that works out to almost 200.000.00$ dollar cost for each job, if that area is so lucrative how come these very profitable gas companies don`t pay for their own roads?
A 200 million dollar gift to big business,I am not against business but why should we continue paying for upgrades when profitable gas companies are ruining the roads?
We the people have to pay ferry fares,we are going to have to pay for port mann tolls,all with after tax dollars,shouldn`t these companies have to contribute to the maintenance of roads they are destroying?
I see there will be no change from premier campbell,he is going to empty the piggy bank to his campaign doners until the bitter end,thank god the bitter end is May 12/2009
Crawford
3 years ago
The wrong kind of stimulus...
...is what Marc Lee at The Lead-Up calls it: http://bcelection.policyalternatives.ca/2009/03/13/the-wrong-kind-of-stimulus/
Rod Smelser
3 years ago
Some Brilliant Economists
I understand that there are some brilliant economists working in the BC Mines Dept, and that the section which oversees policy on this roadway has been a award winner.