Taking the foot off the gas key to more stable climate and energy sector

November 22, 2007

It took intense pressure and heat over millions of years to turn buried plant and animal life into the natural gas that energy companies now suck out of the ground with increasing speed in northeast BC.

It will take just 34 years, based on current rates of production and reliable estimates of what remains, to deplete that irreplaceable, publicly owned natural resource – and half that time if, as BC government leaders have sometimes advocated, energy companies were to double their efforts.

Which raises an interesting question: Why, in a province with a rich legacy of public debate over “sustainable” use of renewable natural resources such as trees, has there been no corresponding talk about what a reasonable rate of development of our finite fossil fuel reserves might be?

Perhaps because just to ask the question is to acknowledge the obvious: that there are limits to the prosperity that we may enjoy from finite resources.

Avoiding uncomfortable truths, however, is bad public policy. It limits options, and inevitably makes things worse for people and communities, particularly rural, resource-dependent communities where plenty of time is required to make transitions from one economic reality to another.

In recent years, we all have benefited from the billions of dollars in royalty payments and bonus bids that energy companies made to the provincial government, which in turn invested some of that money in our medical system, public schools, transportation and the like. Stretching out the benefits of that revenue stream, then, makes a whole lot of social and economic sense. Very importantly, it also makes ecological sense. Because slowing exploitation of natural gas reserves, means fewer greenhouse gasses at a time when the province needs every card at its disposal to meet its ambitious target of a one third-reduction in BC’s heat-trapping gas emissions by 2020, a mere 12 years away.

Happily, there are creative ways to get us moving in the right direction. We can, for example, be much smarter about controlling unnecessary waste in the northeast energy sector. Rampant gas flaring (the deliberate burning of gas rather than capturing it and channeling it into pipelines), combined with gas losses from production facilities and losses from other sources, accounts for a whopping 13 per cent of BC’s greenhouse gas emissions.

The BC government has rightly said that this must stop, giving gas companies until 2012 to halve flaring and until 2016 to eliminate it. Very importantly, the industry has made great strides in doing this in neighboring Alberta. Gas saved from flaring, now gets processed and sold, meaning the companies recoup the added costs of capturing the gas and then some, while the Alberta treasury benefits from more royalty payments.

A forward-thinking BC government would take things further, however, and insist that gas saved through an end to flaring be matched by corresponding reductions in overall exploitation rates. Doing so, would stretch out the life of our gas resources by several more years, while costing the industry nothing in way of lost resources.

In addition to taking a more conservation-based approach to development of our finite natural gas reserves, we also ought to ask another important question. Are we charging companies enough for the gas that they pull from the ground? Recent and highly publicized reports out of Alberta suggest that the government there is foregoing hundreds of millions of dollars annually in resource rents by setting its royalty rates too low. BC, which currently subsidizes provincial energy industry activities to the tune of $200 million annually, is likely doing the same.

It’s time we got a reasonable dollar for our resources. Because they won’t last forever.