According to British Columbia’s auditor general, the province has handed out $1.25 billion in financial incentives to the oil and gas sector since 2009 to encourage production.

Auditor General Carol Bellringer outlined the incentives in her 2013-2014 summary of the province’s financial statements.

“To encourage production of oil and natural gas in B.C., the province provides financial incentives to oil and gas producers,” she said in the report.

“Producers have incurred expenditures that will qualify for $1.25 billion in incentive credits,” she said, “but have not yet produced enough oil or natural gas to claim these amounts.”

That means as producers generate revenue, they can simply claim their incentive credits, reducing how much money the B.C. government collects on the resource.

“In this case,” she notes in the report, “this represents a reduction of $1.25 billion in revenue in future years if all the incentives are used.”

B.C. LNG not the economic saviour premier promises

B.C Premier Christy Clark has portrayed liquefied natural gas, or LNG, as an economic saviour for the province, although her government has consistently made financial and environmental concessions to the natural gas industry to attract business to the province.

In a recent interview with Global News, Clark said: “I will do everything in my power to make LNG work.”

“LNG will transform our economy, pay off debt, and create a better future for our children,” she said.

Clark’s promise of a debt-free future for B.C. rests almost solely on the creation of an LNG export industry. But to date, that industry remains almost entirely speculative in nature. Although several companies have invested large amounts of money for the prospect of exporting B.C.'s natural gas, none have made any final investment commitments.

This summer, major gas developer Apache backed out of a partnership with Chevron to construct an LNG plant in Kitimat, citing a weak gas market. Malaysian gas giant Petronas also recently threatened to back out of its proposed $10-billion LNG plant near Prince Rupert — and perhaps would have had the Clark government not dropped income tax rates for the industry by 50 per cent.

B.C.’s questionable accounting

In her report, Bellringer also noted B.C. has some questionable accounting methods.

“The bottom line is certainly an important element of looking at a set of financial statements, but there’s a huge amount of rich information that can be taken out of the financial statements,” she told The Canada Press.

“I hope that the report does show that, you know, there are lots of things that need to be very carefully looked at in a set of financial statements.”

Bellringer added that the incentives paid to the oil and gas industry “tell an interesting story.”

Since 2009 the province has paid industry, in the form of credits, a total of $1.25 billion with $587 million of that handed out to industry last year alone.

Screen shot of the auditor general report, outlining oil and gas incentives for 2013-2014 fiscal year. Click here for report.

“Of interest,” Bellringer noted in the report, “is how government records the royalty revenues and the incentive expenses. The incentive expenses are deducted from the royalty revenues, and only the net amount is shown in the statement of operations.”

“The incentives claimed are quite large,” she added, “almost 30 per cent of the gross royalty revenue received by government in fiscal 2014.”

“When these producers claim their incentive credits, that money will be deducted from the royalties that they owe, thereby reducing the amount of money government will generate,” Bellringer said in her report.

A 2012 report released by Blue Green Canada, a coalition of environmental and labour groups, noted that Canada’s existing tax incentives for the oil and gas sector frustrates the creation of new jobs in the emerging clean energy sector.

The report, called More Bang for our Buck: How Canada Can Create More Energy Jobs and Less Pollution, stated oil and gas incentives are “the wrong direction if we hope to tap into a growing share of the jobs and opportunity of the global transition towards renewable energy.”

Image Credit: Christy Clark during Encana tour summer 2014 via Flickr

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In spite of the ink that has been devoted to arguing about how many jobs Enbridge Northern Gateway is promising to Kitimat residents, one of the most compelling bits of evidence may be an update to a community planning document produced by the District of Kitimat in 2008. 

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

A week and a half after its discovery, Apache Corporation estimates that a toxic water leak from a pipeline has affected 42 hectares of land near Zama City in Northern Alberta. The spill released 9.5 million litres of what the company called “produced water” from its operations there, making it the tenth largest in the province since 1975.

Neither Apache nor Alberta Environment have spoken officially on the exact chemical content of the water.

However, the Dene Tha First Nation who has been trapping in the area since the 1950s report detection of “hydrocarbons, high levels of salt, sulphurous compounds, metals and naturally occurring radioactive materials, along with chemical solvents and additives used by the oil industry.”

No estimates have been released regarding the duration of the leak, although locals say the evidence shows it could have be present for "months" before it was detected on June 1st.

Chief James Ahnassay told The Globe and Mail “‘Every plant and tree died’ in the area touched by the spill.”

Apache spill from the air. Photo provided by Dene Tha to Globe and Mail reporter Nathan Vanderklippe and made available on twitter.

Images of the spill, released by the Dene Tha to Nathan Vanderklippe, show the high-oil content of the release. According to the ERCB roughly 2000 litres of oil were released in the 9.5 million gallon spill. 

The Hay-Zama Lakes have been designated an "Area of International Importance" since 1982, by the Ramsar Convention on Wetlands. Both lakes are connected by networked waterways.

The Dene Tha has provided the first photos of the affected area, which show wide swaths of brown evergreens and black swampy fields where once there was marshland. The area around Zama City is protected as a Wildland Provincial Park and is a critical habitat for migrating waterfowl and prized for its interlocking waterways, muskeg and wetlands noted for their biological diversity.

Although the leak was reported on June 1st, it was not acknowledged publicly until a week later when a local resident reported it to a newscaster. On Monday, a spokesperson from Alberta Environment said both they and the Energy Recourses Conservation Board had staff on the ground near the spill. But the agency refused to give any estimates about the size until today, saying they were still assessing the situation.

Globe and Mail reporter Nathan Vanderklippe, who has been persuing the story since at least June 10th, has received very little information from either Apache or the Alberta government. Although Apache noted the duration of the release is under investigation.

Q: How much spilled? A: "Don't have a volume. That's part of the investigation." Spill happened June 1, btw. #apachespill

— Nathan VanderKlippe (@nvanderklippe) June 10, 2013

Q: What spilled? A: Produced water. Q: Were they hydrocarbons? A: "Water sampling is being taken daily." But no answer. #apachespill

— Nathan VanderKlippe (@nvanderklippe) June 10, 2013

Q: What size of pipeline spilled, and how old was it? A: "I don't have a diameter or age." #apachespill

— Nathan VanderKlippe (@nvanderklippe) June 10, 2013

Q: How long was it spilling? A: "That's part of our investigation." #apachespill

— Nathan VanderKlippe (@nvanderklippe) June 10, 2013

Q: Does this area produce oil or gas? A: Both. #apachespill

— Nathan VanderKlippe (@nvanderklippe) June 10, 2013

Q: Has any of the leak made it to water? A: No. Q: Have there been any impacts to wildlife? A: "Not at this time." #apachespill

— Nathan VanderKlippe (@nvanderklippe) June 10, 2013

Dene Tha: "every plant and tree" touched by #apachespill is dead. Dene Tha also suspect waterfowl died, although Apache says they haven't.

— Nathan VanderKlippe (@nvanderklippe) June 12, 2013  

Greenpeace campaigner Mike Hudema is questioning the Alberta government’s motive in keeping quiet on the details of the spill:

“With a spill so large why did the Alberta government not report it to the public? Was the Redford government hoping that because of the remoteness of the area that they could just cover it up because no one would notice?”

This is a very chilling question because a yes answer means that Alberta has a government willing to go to almost any length to control it’s image regardless of the truth, the impacts on the environment or the public’s right to timely and accurate information.”

Apache characterizes its operations near Zama as using “a novel enhanced oil recovery method to produce oil from what were once thought to be exhausted wells.”

It is unclear whether this spill comes directly from their fracking operation or from another operation in the area.

Globe News reports there were “23,484 of produced water spills in Alberta between Jan. 1, 1975 and Feb. 4, 2013.”

Apache Corporation has had 949 spills in that time, 575 of which were produced water. None of the companies three media relations personnel were available for comment on this story.

Image Credit: Dene Tha

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