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BC government offers 'royalty credit' to oil and gas drillers

The B.C. government has offered a stimulus package to the energy industry, encouraging it to drill and promising that the measure will bring more money into provincial coffers.

In a news release, Blair Lekstrom, Minister of Energy Mines and Petroleum Resources said the package would "attract investment and produce immediate economic benefits for British Columbia."

"B.C. is one of the most competitive oil and gas jurisdictions in North America, and this stimulus package will further strengthen the sector while increasing provincial revenues," said Lekstrom. "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."

According to the ministry's news release, the package includes four royalty changes:

•A one-year, 2% royalty rate for all wells drilled between September 2009 and June 2010.

•An increase of 15 per cent in the existing royalty deductions for natural gas deep drilling.

•Qualification of horizontal wells drilled between 1,900 and 2,300 metres into the Deep Royalty Credit Program.

•An additional $50 million allocation for the Infrastructure Royalty Credit Program to be offered this fall to stimulate investment in oil and gas roads and pipelines.

According to, this move will draw investment out of Alberta and into B.C.

An Alberta government fact sheet says "the net royalty starts at 25% and increases for every dollar oil is priced above $55 per barrel to 40% when oil is priced at $140 or higher."

The news release did not explain how this measure will reduce fossil-fuel consumption and the production of greenhouse gases.

Crawford Kilian is a contributing editor of The Tyee.

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