The payments were all deducted from royalties
The government of British Columbia has extended more than $1 billion in the form of tax credits to largely foreign-owned oil and gas companies fracking vast expanses of northern B.C. over the last five years.
According to the B.C. auditor general's 2014 summary financial statements report, the province delivered $587 million in incentives to the fracking industry alone last year and $412 million in 2013. The payments were all deducted from royalties.
Shale gas producers such as the Malaysian-owned Progress Energy or Houston-based Apache now pay the province a modest fee or royalty for the right to mine B.C.'s northern gas fields, which are owned by the citizens and First Nations of British Columbia.
Given falling gas prices and the province's slowed liquefied natural gas ambitions, the government has quietly subsidized the indebted industry with lower royalties and a variety of credits for deep well shale gas fracking, road construction and summer well drilling. (Most gas wells are drilled in the winter when the ground is hard.)
Under the program offered by Premier Christy Clark's government, industry "can simply reduce the royalty amount that they owe government by the incentive amount that they are entitled to," explains auditor general Carol Bellringer in the report.
The province has extended so many drilling and construction credits to the cash-strapped industry that 30 per cent of all gross natural gas royalty income is now subtracted from the provincial ledger and given back to industry.