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British Columbia business cheers change of government But no promises on lifting offshore moratorium or lowering oil patch taxes; ailing forestry and mining sectors capture most of election spotlight Gary Park PNA Canadian Correspondent
The voters of British Columbia did what has been expected for years and cleaned house politically in late May, installing a new government that has promised to make it easier for all resource companies to operate in the province.
Under the province’s new premier, Gordon Campbell, the Liberal Party achieved one of the greatest election landslides in Canadian history, ousting the left-wing New Democratic Party which had governed for 10 years and capturing 77 of the 79 legislative seats.
Business leaders now hope for a complete overhaul of the resource-rich province’s economic structure, with special emphasis on an early review of the moratorium on offshore exploration, major cuts to corporate taxes and easing the regulatory burden.
Oil and gas industry below radar However, it is far from certain that the petroleum industry will have all of its wishes met in short order.
Richard Neufeld, before being named the new energy minister, said the Liberals are committed only to reducing personal income tax levels to among the lowest in Canada, a promise they have already acted on. Further tax-cutting decisions will wait until the new government has examined the financial situation left by the NDP — one it has warned is likely far worse than the NDP’s glowing pre-election estimates, he said.
Neufeld said corporate taxes will be cut “in time” and the government will reduce needless regulation for every industry by one-third within three years — although no promises have specifically targeted the oil and gas sector.
Despite its rapid growth in recent years, with royalties and license sales producing C$650 million in revenue for the province last year, the oil and gas industry flew below the radar screen during the election campaign and was not even mentioned in the Liberal platform, while the ailing forestry and mining sectors were front and center.
Neufeld said the robust state of the industry was the main reason it avoided the campaign spotlight.
“When you have a forest industry that’s totally on its knees, you’re going to hear more about that,” he said. “So politically you’ve got to use your head a bit.” Some unease from producers That hesitation has caused some unease in the Canadian Association of Petroleum Producers, whose members represent 95 percent of Canada’s oil and gas output.
CAPP president Pierre Alvarez conceded that the industry’s low campaign profile was understandable to some extent because “we’re in a very isolated part of the province and restricted to a relatively small geographic area.”
But he said CAPP did meet with Campbell and Neufeld to lobby for corporate tax reductions, despite Neufeld’s claims that British Columbia gets little tax revenue from oil and gas companies, and an easing of some more stringent regulations.
“We’ve been clear about our priorities in terms of reducing the cost of doing business in B.C.,” he said. “Clearly taxation is an issue and that’s both corporate and, more broadly, other forms of business taxes.”
Alvarez also said improved regulatory systems to provide faster access to exploration land and clarification of aboriginal disputes in northern British Columbia are vital. Moratorium one of stickiest issues One of the stickiest issues on the government’s plate is a 25-year moratorium on oil and gas exploration in the shallow waters off British Columbia’s northern coast at the southern tip of the Alaska panhandle.
A 1998 study by the Geological Survey of Canada put a preliminary figure on recoverable reserves from the Queen Charlotte offshore at 43 trillion cubic feet of gas and 10 billion barrels of oil — greater than the most optimistic projections for Canada’s East Coast.
But a report last year by the British Columbia Institute of Technology and Maritime Awards Society suggested the GSC was conservative in its estimates. It said experience gained from offshore exploration in Eastern Canada and other regions could boost the ultimate potential for the region to 490 trillion cubic feet of gas and 19 billion barrels of oil.
The most recent provincial moratorium on offshore exploration was put in place after the Exxon Valdez spill in 1989. A federal ban is also in effect until British Columbia decides to lift its moratorium.
A 1999 British Columbia government document estimated it would likely take five to 10 years to complete required shared-management negotiations, environmental studies and data analysis before any drilling could occur.
Neufeld said he supports offshore development, but — given environmental and aboriginal concerns — cautioned that a lengthy public consultation and study process is essential.
He said the “quickest way to stop any drilling on the North Coast” would be for Campbell to say “We’re going to drill.”
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