On Tuesday, March 24, 2015, the British Columbia provincial government introduced Bill 23, the Miscellaneous Statutes Amendment Act, 2015, for first reading in the legislature. The proposed amendments, if passed, will include changes to both the Oil and Gas Activities Act (the “OGAA”)and the Petroleum and Natural Gas Act (the “PNGA”).
With respect to the OGAA, the construction and operation of petroleum refineries and manufacturing plants designed to convert natural gas into other organic compounds (e.g. gas-to-liquids) will be added to the definition of “oil and gas activity”. The effect of this amendment will be to make the Oil and Gas Commission solely responsible for the construction, operation, and permitting of such facilities, consistent with the government’s “one window” regulatory approach for the oil and gas industry. The existing Burnaby and Prince George refineries would be grandfathered out.
With respect to the PNGA, a new section governing “royalty agreements” will be introduced. These amendments are intended to allow the Province to enter into long-term royalty agreements with natural gas producers, guaranteeing revenue to the Province and providing long-term certainty to producers. These agreements will be public. Parties to such royalty agreements will be exempt from the regular royalty scheme. The terms of the agreement itself will dictate issues like: (i) royalty amounts, (ii) minimum payments/levels of production, (ii) investment requirements, and (iii) penalties for failure to comply with the agreement.