The BC government is cutting its biggest oil and gas subsidy to better meet its climate action goals and generate $200 million in additional revenue a year.
On Thursday, Premier John Horgan and Energy Minister Bruce Ralston announced a new royalty system that will eliminate the deep well program and increase the minimum royalty rate from 3% to 5%, which is similar to the current rate. from Alberta.
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The extra royalties — fees the province charges companies to extract state-owned oil and gas — will go toward public services like roads and hospitals, and climate action, according to a news release.
The deep well program, established in 2003, was initially intended to offset the higher drilling and completion costs incurred by deep wells.
Getting rid of it will mean a loss of credits between $440,000 and $2.81 million for companies, depending on the depth of the well.
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The new system will apply to all new wells and will be phased in over two years starting September 1.
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However, Tracey Saxby, executive director of a group that lobbies for an end to fossil fuel subsidies called My Sea to Sky, said the move means the province is “doubled down” on subsidies for fracking and oil exports. liquefied natural gas.
“What the province calls royalties are actually taxpayer subsidies that go directly into the pockets of global oil and gas companies that extract fossil fuels,” Saxby said in a statement.
“He canceled a handful of subsidies only to replace them with a ‘revenue minus cost’ scheme that allows global gas producers to fracture for natural gas without any commercial risk.”
– with a file from The Canadian Press
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