FRACKING OPERATIONS NORTH OF
HUDSON’S HOPE, BRITISH COLUMBIA

September 30 - October 3, 2010
Photos and Text by Will Koop,
B.C. Tap Water Alliance
October 13, 2010
Website: www.bctwa.org/FrackingBC.html
Email: infobctwa.org

THREE CONSIDERATIONS

In this 44-page document, readers should consider three key questions:
1. Can the planet afford to burn British Columbia’s (BC’s) shale gas?
2. Should the citizens of BC allow the shale gas industry to enclose/destroy and privatize the Commons’ lands and waters?
3. If we decide that we can afford to burn BC’s shale gas, what is the public’s “fair share” of industry’s revenues?

Shale gas development in northeast B.C., particularly in the Horn River Basin near Fort Nelson, could become a major economic driver for the province. The shale gas industry could develop this resource of trillions of cubic feet of natural gas, resulting in substantial royalties for the provincial government over many decades. However, this gas is associated with high concentrations of CO2, which is normally vented to the atmosphere as the gas is processed to market standards. (Page 3)

The B.C. government should conduct a thorough analysis of its evolving natural gas industry and the implications for its GHG (Green House Gas) targets. In particular, it needs to extend the preliminary analysis of this paper to examine options for preventing CO2 venting and for reduction of methane leaks from pipelines and emissions from processing facilities. Policies to be explored include carbon taxes, subsidies, regulations and, if necessary, moratoriums. (Page 7)
(Source: Shale Gas and Climate Targets: Can they be Reconciled? By Marc Jaccard and Brad Griffin, for Pacific Institute for Climate Solutions, 2009.)

Royalty cuts by the British Columbia (BC) government ignited natural gas production development with potential to match or exceed the supply addition represented by the proposed Alaska pipeline from the North Slope, Canadian industry analysts say.

The activity trigger is a BC net-profit royalty regime that is a clone of the enticing approach Alberta enacted for its oilsands in the mid-1990s, Peters says.

In the gas case, the rate is held down to 2% until costs including infrastructure such as roads and pipelines are recovered from new production. After that “payout” point, the provincial levies can rise on a sliding scale determined by market conditions, but are only collected on net profits or revenues after expenses rather than following customary royalty practices of taking a share of gross sales.

“Assuming a long-term natural gas price of US $5.50/Mcf, the average royalty rate paid on a Horn River well would be about 15%, significantly lower than royalties paid in comparable shale plays in the U.S. and Canada,” the Peters research calculates. “This royalty framework has many similarities to...the Alberta oilsands royalty, which was a key driver behind spurring significant investment in the oil sands in the late 1990s and early 2000s.”
(Royalty Cuts Light a Fire Under BC Producers, Natural Gas Intelligence, July 19, 2010)

The full report and pictures are at:
http://www.bctwa.org/FrkBC-Talisman-Oct13-2010.pdf