British Columbia Gearing Up for Faster Development

Moving right along on the road to increased Canadian production and exports, the provincial government in British Columbia has taken the first step toward removing regulatory roadblocks by creating a single agency to deal with the oil and gas industry and locating it in producer territory. The B.C. government also anounced it has made peace with native communities on behalf of the industry.

Access to B.C. is a key ingredient of the Canadian gas community's growth strategy. Alliance Pipeline Project's proposed route to Chicago originates in northeastern B.C. The 1.3-Bcf/d export route is expected to set off aggressive drilling there if, as widely expected, it receives approval from the National Energy Board before Christmas.

Even without Alliance, B.C. is a hot drilling target where exploratory wells into virgin reserves have yielded production tests exceeding 80 MMcf/d. Multiple, overlapping jurisdictions, delays in obtaining government approvals and poor communications among the bureaucracy, gas producers and native communities have long been major industry grievances in B.C.

The new British Columbia Oil and Gas Commission has a mandate to sort out the mess and will have its headquarters in Fort St. John, the capital of industry activity along the northern Rocky Mountain foothills. To head up the agency as commissioner, the province appointed a veteran civil servant, politician and specialist in native affairs, David Porter. He has a long list of credentials in initiating and implementing northern Canadian resource development agreements, including gas pipeline projects in environmentally sensitive regions where Indians are the dominant population group.

B.C. Energy Minister Dan Miller described Porter's role as "bringing the various interests in the province to a common table" to foster "a healthy and open environment" for the oil and gas industry. The new commission's C$8 million (US$5.7 million) annual budget will come entirely from user fees and production levies on the industry. Miller said creation of the commission, as one of numerous changes covered by agreements with Canadian producers, will contribute to a "three-year economic strategy to cut taxes, cut red tape and stimulate investment." B.C., in tandem with industry leaders, forecasts up to C$25 billion (US$17.5 billion) in investment will double the province's gas production over the next 10 years.

The B.C. government also reached new agreements with Indian communities on improving the investment climate. MOUs or memoranda of understanding with three of the area's six Indian nations-Fort Nelson, West Moberly and Halfway River-acknowledge treaty rights and provide funds to cover costs of consultation with companies planning to drill on traditional territories. Besides an end to antagonism that has spilled over into court cases, gas producers expect to gain greater predictability of costs, schedules and operational requirements. West Moberly Chief George Desjarlais called the pacts a "new approach to a hundred-year old issue."

Gordon Jaremko, Calgary

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