BC Natural Gas Royalty Payments Criticized for Flaws and Loopholes

In British Columbia (BC), natural gas resources are publicly owned and companies like Shell Canada pay royalties on each unit of gas produced.

However, records show that in 2019, Shell paid no royalty payments despite producing 175 billion cubic feet of natural gas. This is not an isolated incident, as the company's royalty payments have rapidly declined over the years.

The BC NDP government was accused of using 'flawed price forecasts' to calculate royalty payments, which overstated the expected revenue by nearly $1.5 billion over five years.

The government expects royalty revenues to nearly double from $766 million in the current fiscal year to $1.4 billion in 2027-28, driven by higher royalties for natural gas liquids and increased production.

However, critics argue that generous loopholes and subsidies allowed companies like Shell to largely avoid royalties. Economist Jim Stanford notes that these loopholes are the primary reason for declining royalty revenues.