BC's New Royalty Regime Causes Jitters in LNG Industry

British Columbia's new royalty regime on gas extraction has caused concerns in the energy industry, particularly for major liquefied natural gas (LNG) investments. The updated proposals aim to make the system 'simpler, more transparent, and aligned with today's market,' according to BC's Energy Ministry.

The government presentation last month alarmed businesses when it appeared to show they'd pay a larger royalty that would kick in at higher gas prices. Companies had already made drilling plans for the next year, and the review of the oil and gas royalty system has been ongoing for several years.

Prime Minister Mark Carney has championed LNG projects as part of Canada's plan to diversify its trading relationships. The huge project known as LNG Canada started shipments to Asia last year, but a second phase is still under consideration by Shell PLC and other global energy majors.