British Columbia (BC) on Monday increased the amount of natural gas and oil royalty credits available to producers to encourage infrastructure development.

The program, first offered in 2004, is designed to increase competitiveness and stimulate activity in the province by opening access to new and underdeveloped areas, said Energy, Mines and Petroleum Resources Minister Blair Lekstrom.

“In these times of economic instability, it is imperative that we take action to support and encourage economic activity that will continue to provide jobs for British Columbians in BC’s oil and gas industry and its key support sectors,” said Lekstrom. “Expanding this already successful royalty program to C$120 million in available royalty credits will improve our competitive position for attracting investment and contribute to the ongoing growth and development of our oil and gas industry.”

The amount of royalty credits was increased this year to C$120 million from C$100 million in 2008 and C$90 million in 2007. Since its inception five years ago, the Infrastructure Royalty Credit Program has allocated more than C$316 million in infrastructure royalty credits to oil and gas companies. The program to date has led to 72 new road-based projects and 53 new pipeline projects for a total capital investment in the province of more than C$632 million, officials said.

Greg Stringham, vice president of the Canadian Association of Petroleum Producers, said the BC program helps lower the cost to develop certain areas. Alberta, he said, sees the program “as another move in the competitive landscape.” Alberta remains the leading energy province in Canada, but British Columbia’s emerging gas and oil plays, which include the Horn River Basin and the Upper Montney, are drawing producers and pipeline developers (see Daily GPI, March 2).

Companies with proposed road or pipeline infrastructure projects may apply for the royalty credits until April 30. As in previous years, all projects applying for credits under the program “will undergo a rigorous evaluation and ranking process, and only those that ensure the highest economic benefits for British Columbia will be approved,” according to the energy ministry.

More information is available at: www.empr.gov.bc.ca/OG/oilandgas/royalties/infdevcredit/Pages/default.aspx.

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