NEW: Oil and Gas Activities Act

The BC Government has introduced the new Oil and Gas Activities Act (OGAA) in the Legislature. OGAA consolidates a number of related statues, including the Petroleum and Natural Gas Act, the Oil and Gas Commission Act, the Pipeline Act and the Forest Practices Code Act.

OGAA also introduces more results-based "regulation" of the oil and gas industry, in which companies are expected to be self-policing. We have long maintained that the purported benefits of this approach to regulation - reduced cost and onus on government - are hugely offset by the risks, indeed likelihood, that companies will cut corners, dodge responsibility, and prefer to pay penalties if they are ever caught. The greatest risk is damage to the environment that will be discovered long after the event, at which point penalties etc. are an empty resolution.

Bill 20 at First Reading

MEMPR News Release, 08-Aug-2008

B.C. makes it easier for companies to exploit natural gas reserves
Wendy Stueck, Globe and Mail, 09-Apr-2008

VANCOUVER -- Bracing for a boom, British Columbia has overhauled its oil and gas rules to nurture a sector where major players are sitting on what are believed to be some of the biggest discoveries in Canadian history.

The new Oil and Gas Activities Act is aimed in part at making life easier for companies that want to exploit, in particular, natural gas deposits that, while large, are technically difficult. Excitement surrounding exploration results in the province generated a breakthrough $1-billion in land rights sales last year.

B.C. has a "strong interest" in developing the province's emerging gas plays, energy minister Richard Neufeld said in a statement.

Northeastern British Columbia is the heart of the province's natural gas boom and the Horn River Basin, north of Fort Nelson, appears to be home to some of the most promising discoveries.

Yesterday, Apache Corp. of Houston, which is working with EnCana Corp. of Calgary, announced three new wells drilled this winter all delivered big amounts of gas. EOG Resources Inc., also Houston based, has made large discoveries as well.

Apache and EnCana have locked up about 400,000 acres at the centre of the Ootla shale play in the Horn River region.

Horn River is a shale gas play, for decades considered a fringe resource at best. Last year, to help spur development, the B.C. government adopted an oil sands-like royalty framework for shale and other complicated exploration areas, charging only a nominal 2 per cent until companies recover their costs.

With conventional natural gas deposits on the wane in North America, companies are pouring millions into unconventional gas plays, encouraged by advances in technology such as horizontal drilling and subsurface fracturing of the complex and difficult shale rock in which the natural gas is trapped.

Bidding for new exploration land in B.C. remains at a record rate, with $277-million spent by energy companies this year, leaving the province on pace to break its record of $1-billion set last year.

The new act will replace three existing pieces of legislation, consolidating requirements for industry while protecting the environment, Mr. Neufeld said.

Oil and gas exploration development is a contentious issue in several parts of the province, including northwestern B.C., where Shell Canada Ltd. has run into stiff opposition over its plans to explore for coal-bed methane.

"It's important that we get the regulation of oil and gas right, because it is such a huge economic driver for the province," said Greg Cowe of West Coast Environmental Law, adding that the sector is expected to generate more than $2-billion in royalties and land sales for the province in its current fiscal year.

"At the same time, it accounts for about 20 per cent of greenhouse gas emissions in B.C., so there is a tension of trying to balance those two sides."

The B.C. government has introduced a carbon tax and cap-and-trade legislation as part of its plan to slash greenhouse gas emissions by 30 per cent by 2020.

As part of its revamped oil and gas regime, B.C. on Friday launched a landowner notification program to provide registered surface owners in northeast B.C. with information about rights sales.

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