B.C. Election Results Loom Large: Much On The Line For The Future Of Northeastern B.C. Resource Development And Environmental Policy

By: Paul Wells
Published: Daily Oil Bulletin

With British Columbians set to go to the polls Tuesday, the Bulletin continues its look at election issues of relevance to the oil and gas industry as they relate to the platforms of the two front-running parties — the B.C. Liberals and the NDP.

Gary Leach, president of the Producers and Explorers Association of Canada (EPAC), said the Liberals would be the oil and gas industry’s party of choice, noting the party’s promise to introduce a deep oil well drilling credit targeted at B.C.’s emerging Montney light oil resource that they say “will be competitive” with Alberta.

“This is something EPAC has been advocating for several years now so we were pleased to see that in their campaign pledges. The Liberals say that 50 per cent of the oil revenue they receive from the Montney would be put into a ‘Prosperity Fund’ for future generations,” he said.

“The B.C. Liberals also say they will freeze the carbon tax in the province until 2021 whereas the NDP platform says they will phase in the federal $50 per tonne carbon tax over three years starting in 2020. The NDP also say they will convene a panel to review the science behind hydraulic fracturing.”

Duane Bratt, a political science professor at Calgary’s Mount Royal University, agreed with Leach in terms of which party—the Liberals under incumbent Christy Clark, or the NDP-led John Horgan — would work better with industry to fulfill the vast promise of B.C.’s oil and gas bounty.

“The Liberals would be better for the oil and gas industry, absolutely,” he said.

Bratt said he’s been somewhat surprised that oil and gas-related issues have not been more of a focus on the campaign trail, where debate has been centred around the housing market, environmental policy and other Vancouver and Lower Mainland-centric issues.

“There really hasn’t been a lot of dialogue in this election regarding oil and gas, especially on LNG as it was Christy Clark’s big move last election [in 2013],” Bratt said.

“She said then that LNG was going to be the real economic revival of British Columbia. It hasn’t fizzled out, but it’s nowhere near what she was promising in 2013. Not even close.”

Yet the LNG issue, for the most part, has taken a backseat during the election campaign, he added. And that’s despite it being a focal point, an issue of prominence, for voters in northeastern B.C. and elsewhere in the province.

“You’re seeing the different views of the electorate in the Lower Mainland and areas like northeastern B.C. with Trans Mountain and LNG,” Bratt said.

“Even though there are a huge number of jobs at stake in Burnaby [part of the greater Vancouver area], most of the opposition is centred in Burnaby yet supported in the rest of the province, except maybe [Vancouver] Island.”

Bratt said parallels between the current B.C. provincial election and the next Alberta election can be drawn. In fact, he believes an NDP victory Tuesday could have ramifications that could impact the political scene on the other side of the Rockies.

And despite sharing the same party name and initials, he believes Alberta Premier Rachel Notley isn’t likely rooting for a B.C. NDP win come election night.

“The B.C. election could very well be a preview of the next Alberta election because it truly is a two-party election and that looks to be where we’re going [in Alberta]. I think Notley is a clear example of the difference of being the NDP in opposition and the NDP in government. I’ve been saying for a while, and for that matter the same with Prime Minister [Justin] Trudeau as well, they really don’t want to see the NDP in power in B.C.,” Bratt said.

“It’s interesting at how closely the Alberta and B.C. parties were until Notley was elected. There’s no love lost now because Notley knows that a B.C. NDP victory might cause her to lose power here. There’s no guarantee that if Clark wins that Notley would win. But I would suggest that there’s a really good chance that if Horgan wins, Notley would not.”

The first installment in the Bulletin’s B.C. election coverage, (DOB, May 3, 2017), looked at the respective platforms regarding the Trans Mountain pipeline expansion project and LNG development in the province.

The Montney and other northeastern B.C. natural gas and oil development

The Liberal Party under leader Clark plans to continue promoting and encouraging “responsible development” of the Montney and other petroleum-prone areas in northeastern B.C.

“For decades, British Columbia has benefitted from extracting natural gas resources. Communities like Fort Nelson, Dawson Creek and Fort St. John have seen jobs, economic growth and infrastructure created as a result of the natural gas industry,” the party platform states.

“Technological advances have vastly increased the supply of natural gas in British Columbia. Hydraulic fracturing has allowed producers to unlock previously unknown reserves and ensure B.C. has a strong and stable supply of natural gas for the next hundred years. Nowhere is hydraulic fracturing more important than in the Montney Basin, and nowhere in the world is it done more safely.”

The Liberals note that in just the past four years, “massive investments” have been made in pipeline and gas processing infrastructure to ensure natural gas resources are able to be extracted, shipped, and processed. Examples include:
  • A partnership between Encana Corporation and Veresen Inc. has committed $2.5 billion in three gas processing plants.
  • Painted Pony Petroleum Ltd. and AltaGas Inc. have invested $350 million in a gas processing plant just north of Fort St. John. In January, AltaGas announced a $475 million propane export facility in Prince Rupert.
  • TransCanada Corporation has received federal and provincial approval for their $1.7 billion North Montney Mainline project creating approximately 2,500 direct construction jobs.
  • Spectra Energy Corp. invested nearly $600 million to expand its natural gas collector pipelines.
The B.C. Liberal Party said that not only are there massive world-class gas deposits in the Montney, there are huge opportunities to create a new light oil industry in the Peace. The Montney deposit in British Columbia contains gas, oil, condensate, and other liquids such as butane and propane, making it an incredibly attractive reserve.

The Grits note that companies like ARC Resources Ltd., Crew Energy Inc. and Encana are currently drilling and evaluating the potential opportunity to extract this vast energy resource.

“Today’s B.C. Liberals want to responsibly develop the Montney for British Columbians. These deposits have the ability to generate jobs, revenues, and economic benefits for decades to come, provided the right regulatory, policy, and royalty frameworks to allow for environmentally sustainable development is in place,” the party said.

Moving forward, the Liberal Party pledges to “unlock the oil resources contained in the Montney Basin” through a new oil, deep-well royalty credit that is competitive with Alberta. It will also place 50 per cent of all oil revenues produced from the Montney Basin in the Prosperity Fund to benefit future generations.

During an editorial board sit down with Business in Vancouver, a sister publication to the DOB, Liberal leader Clark doubled down on her support for Montney development, highlighting the play’s growing light oil potential.

“We have some of the best reserves of light oil in the Montney, and we are going to get that going. I know the NDP and Greens don’t support oil. We have some of the best light oil anywhere in the world, and we are going to get that industry going, should we be elected,” she said.

The NDP platform didn’t dive deep into the party’s plans for development of the Montney resource and associated infrastructure.

However, the party noted that most of B.C.’s natural gas is produced using hydraulic fracturing, a process that has been used in northeastern B.C. for decades.

“With the potential of a significant expansion of gas production in the years ahead, we will appoint a scientific panel to review the practice to ensure that gas is produced safely, and that our environment is protected,” the NDP said in its platform.

“This will include assessment of impacts on water and, given recent minor earthquakes in the area, what role gas production has in seismic activity.”

The NDP platform also calls for a review of oil and gas subsidies.

Overall, the cost of doing business in B.C. would increase under an NDP government.

The NDP would raise corporate taxes to 12 per cent from 11 per cent — but shave half a percentage point off the small-business tax — and increase the minimum wage to $15 per hour by 2021 from the current $10.85.

When asked where he sees the province’s resource sector going in the next five years, NDP leader Horgan offered the following:

“I believe that there is an opportunity for our natural gas sector to continue to grow. The premier made some fairly outlandish commitments before the last election. None of them have been realized. Market conditions weren’t there five years ago,” he said.

“The world is awash in natural gas. We have it in abundance. It’s a natural resource that belongs to all British Columbians and I’m anxious to get that to… higher priced markets. So on the natural gas side, I’m very optimistic that, over the long term, I think there’s opportunity there.”

Bratt said Clark is “clearly” on the pro-development side and Horgan “is not.”

“It’s almost like Horgan sees the biggest opponent not as Clark, but [Green Party leader Andrew] Weaver. He [Horgan] is attacking on a lot of environmental issue and does not seem overly supportive, at all, of oil and gas development.”

Climate change and environmental policy

The NDP’s climate policies include new greenhouse gas (GHG) reduction targets and carbon tax increases.

“We recognize that climate change is among the most significant challenges we face. Countries around the world are taking action to modernize their economies, improve transportation and lower their impact on the environment. B.C. is well positioned to be a leader in these efforts with a government that will act, like John Horgan and the B.C. NDP. Under Christy Clark, B.C. is lagging behind,” the party platform reads.

The NDP believes that protecting the environment and taking action on climate change will build a sustainable economy and create good jobs in every sector and every region of our province, now and going forward.

“Christy Clark and the B.C. Liberals have chosen to pit jobs against the environment. It shouldn’t be that way, but the Liberals have shown over and over again that they are living in the past, and won’t do what’s right for the future,” the party said.

“We will take action to create tens of thousands of new, sustainable, permanent jobs, while reducing B.C.’s climate change emissions and growing the low carbon economy.”

Horgan said that Clark struck a panel on Climate Leadership and then “proceeded to ignore it.”
“The panel worked hard to identify innovative action that would support sustainable growth in our economy, reduce our carbon pollution and make life more affordable for families. Its work should be valued and implemented,” he said.

“We will renew the Climate Leadership panel within our first 100 days, and work towards implementing their full suite of recommendations under our core principles for climate action. We will put B.C. on a path to meeting B.C.’s legislated 2050 greenhouse gas emission reduction target of 80 per cent below 2007 levels and will set a new legislated 2030 reduction target of 40 per cent below 2007 levels.”

The NDP would introduce a federally mandated carbon price of $50 a tonne by 2022, but do it over three years, starting in 2020.

“It’s going to be a gradual implementation and we’re going to make sure that almost 80 per cent of British Columbians will get some form of a rebate so they can have less money out of their pocket than before,” Horgan said.

The NDP said its plan was built on solid principles: carbon tax revenue neutrality, affordability for British Columbians, and competitiveness with other jurisdictions to ensure B.C. citizens and employers “are not unfairly treated as we grow our economy.”

Working within the parameters of the federal government’s mandate, the NDP said it will work to provide predictability for B.C. businesses and protect B.C. families from facing another hit on their pocketbook, while taking action to further reduce carbon emissions. As outlined in its Clean Growth, Climate Action plan, the NDP would:
  • Phase in the federally mandated $50 per tonne carbon price by 2022 over three years, starting in 2020.
  • Create a new climate action rebate cheque for low and middle income families. This cheque will go to 80 per cent of B.C. households, with a majority receiving more back from this rebate than they pay in new carbon taxes. The rebate will be issued at the start of each year, so families aren’t out of pocket.
  • Provide certainty to stimulate investment and protect trade exposed businesses, maintaining the province’s competitiveness, by establishing separate sectoral reduction goals and sectoral reduction plans for transportation (30 per cent reduction by 2030), industry (30 per cent reduction by 2030), and buildings and homes (50 per cent reduction by 2030).
  • Update environmental assessment legislation and processes to ensure that they respect the legal rights of First Nations, and meet the public’s expectation of a strong, transparent process that results in the best outcomes as part of a made in B.C. assessment process.
  • Improve environmental assessments to provide certainty to project proponents, First Nations, and all British Columbians, faster.
The federal government is set to implement a national carbon price floor in 2018, as part of the 2016 federal-provincial-territorial Pan-Canadian Framework on Clean Growth and Climate Change. The carbon price floor will start at $10 per tonne in 2018 and escalate annually to $50 per tonne by 2022.

The NDP platform would match the $50 floor in 2022, but proposes a faster implementation of carbon tax increases than the national minimum: to $36 in 2020 and $43 in 2021.

Clark and the Liberals are campaigning on a “made in B.C.” climate plan.

“Clean energy is a vital part of British Columbia’s global leadership in climate policy. We were the first jurisdiction in North America to put a price on carbon, through a transparent and revenue-neutral carbon tax,” the party said in its platform.

“Last August, we released our Climate Leadership Plan that builds on the work started in 2008 and charts a course to hitting our target of reducing greenhouse gas emissions by 80 per cent of the province’s 2007 emissions by 2050.”

B.C.’s carbon tax was launched at $10 per tonne in 2008 by then-premier Gordon Campbell. It moved up to $30 per tonne and Clark froze it when she took office three years later and the tax currently still sits at the $30 per tonne level.

During the campaign, Clark said contrary to Horgan’s criticisms the Liberals accepted many of the Climate Leadership panel’s recommendations.

“We did not, though, accept the key recommendation in the minds of some of the folks from the environmental movement, which is that we double the carbon tax,” she said.

“Is now the time to double the carbon tax, to hike business taxes, to hike personal income taxes, when we are facing a rising tide of protectionism and a tax-cutting government down south of the border? I think it would be disastrous for jobs in our province.”

In December, the Clark-led provincial government signed onto the Pan-Canadian Framework on Climate Change and agreed to do its part to achieve the Canadian commitment on greenhouse gas emissions.

“The federal government agreed to help assist the province with funding to reduce our greenhouse gas emissions and store carbon. From converting energy sources in our natural gas fields from diesel to clean electricity, to helping fund the refurbishment of electricity transmission lines between Alberta and B.C. to help Alberta transition from coal fired power to clean electricity, British Columbia has a plan to help fight global climate change.”

Despite the NDP’s claims to the contrary, Clark is adamant that B.C. remains a leader on climate change.

“Nobody else in North America is paying a $30-a-tonne carbon tax, nobody,” she said. “And we should be very proud of our leadership position. As other people catch up we’ll be in a position to rethink that policy. But we are going to freeze it.”

Mount Royal’s Bratt says there’s a stark contrast between the two parties’ environmental/climate change platforms.

“Horgan plans to be more aggressive, absolutely. But the B.C. record, and Clark has been campaigning on her record, is not bad. They were the first jurisdiction to bring a carbon tax in and I wonder if that’s tied into her coal announcement to sort of remind people of the existence of the carbon tax and how it existed well before the Alberta carbon tax,” Bratt said.

“What Horgan is promising in regard to the carbon tax in B.C. goes well beyond what the requirements of even the Trudeau government are where Clark is saying there’s nothing wrong with the policy we have in place.”

At the end of the day, Bratt said the B.C. provincial election is taking on the tone and tenor of the last Alberta election.

“The real issue here, and I’m not in B.C., but what I’m seeing is that the strength of the NDP campaign is not about the issues of the day and the policy directions of the two parties, rather it’s almost like it’s the ‘time for a change’ approach,” he said.

“The Liberals have been in power a very long time, and it’s perceived by some that they have a sense of entitlement and are perceived to be arrogant by many — it’s reminiscent of what happened in Alberta during the last election. With potentially the same consequences.”


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