With fossil fuel prices rising and liquefied natural gas (LNG) export facilities under construction to propel industry growth, British Columbia (BC) has launched an overhaul of its notoriously complicated natural gas and oil royalties.

BC royalty system

“The BC royalty system for natural gas and oil is broken,” according to a government-commissioned preliminary report. The assessment was done by professors Nancy Olewiler at Simon Fraser University in Vancouver and Jennifer Winter at the University of Calgary.

The assessment serves as a launching pad for a comprehensive review of the royalty system. Established in 1992, the BC royalty structure “does not support and contribute to government and societal goals,” the co-authors said in the 106-page report.

The provincial royalty regime...