Sixteen exploration and production (E&P) companies were awarded a total of C$115.6 million in royalty credits for 21 natural gas and oil infrastructure projects, British Columbia Minister of Energy, Mines and Petroleum Resources Bill Bennett said Tuesday. The credits were awarded under the province's Infrastructure Royalty Credit Program (IRCP).
"Today we are leveraging strong investor confidence in our natural gas and petroleum sector to develop new infrastructure for the benefit of all British Columbians," said Bennett. "This program is directly responsible for bringing new investment, new jobs and additional revenues to help fund education and health care."
The new road and pipeline projects are to support gas and oil exploration and development activity, and improve access to underdeveloped areas in northeast British Columbia. The projects are expected to bring new economic opportunities and jobs to the region. In addition, new production is expected to generate additional royalty revenue for the province.
Historically, the IRCP generates about C$2.50 in incremental royalties for every dollar awarded in royalty credits.
According to Bennett, projects were awarded credits following a request for applications and a careful evaluation of each project's economic benefits to British Columbia. "As in previous years, industry response to the request for applications was very strong, with applications for 47 projects involving a total request of approximately C$706.4 million in estimated construction costs."
Producers are given royalty deductions in exchange for investing in road and pipeline infrastructure. Companies are required to fund the entire cost of an approved infrastructure project and may receive up to 50% of the eligible project costs from the province paid in the form of royalty deductions once the project is completed.
Since 2004 the program has allocated more than C$485 million in infrastructure royalty credits, resulting in 71 new road-based projects and 83 new pipeline projects.
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