The province has developed an oil and gas stimulus package designed to attract investment and produce immediate economic benefits.
Minister of Energy, Mines and Petroleum, Blair Lekstrom, made the announcement on Thursday.
He says capital investment is very fluid nowadays and the province wants to encourage the oil and gas sector to invest in British Columbia.
The strategy’s goal will increase jobs and infrastructure projects. This stimulus package will not require direct government spending to increase activity and investment, while generating revenue to the Crown.
Lekstrom says after three years the program should generate $2.50 in net incremental revenues for every $1 of royalty credit provided. So, the Crown benefits from the activity in addition to royalty revenue generated from wells that would likely not have been drilled.
Royalty initiatives included in the package are:
– A one-year, two per cent royalty rate for all wells drilled in a 10 month window (September 2009 – June 2010).
– An increase of 15 per cent in the existing royalty deductions for natural gas deep drilling.
– Qualification of horizontal wells drilled between 1,900 and 2,300 metres into the Deep Royalty Credit Program.
– An additional $50 million allocation for the Infrastructure Royalty Credit Program to be offered this fall to stimulate investment in oil and gas roads and pipelines.
Crown revenue from the stimulus package will go to education, health care and social program funding and development.