British Columbia is subsidizing oil and gas well drilling on the same land it has promised to protect for caribou, new research has found.
“The B.C. government has made a lot of commitments to caribou habitat restoration and it’s not really working,” said Adriana DiSilvestro, a University of British Columbia graduate student and lead author on the project, which is published on the website of ARCGis Online, a cloud-based mapping software.
“The fact there are oil and gas operations being subsidized in areas the federal government has deemed critical habitat is a piece to this puzzle.”
The researchers say the study was reviewed by several experts, including independent economist Robyn Allan, and they plan to submit their findings to a peer-reviewed scientific journal, The Canadian Press reports.
DiSilvestro and her colleagues first identified wells in northeastern B.C. and located them on federal maps showing critical habitat for woodland caribou, a threatened species for which the province has promised to develop a recovery plan.
The team then used government and industry data to determine which of those wells had benefited from a government subsidy. Those subsidies include programs such as the province’s Deep Well Royalty Program, which covers part of the drilling and completion costs for these wells, up to C$2.8 million per well, and can be used to reduce royalties by half.
Deep Well Royalty Credits Draw Scrutiny
The Deep Well Royalty Program came under separate scrutiny in June when Stand.earth and Dogwood reported that B.C. had doubled its fossil fuel subsidies since Premier John Horgan’s NDP government took office in 2017, with oil and gas fracking companies as the big winners. The groups said subsidies totalled $1.3 billion for the province’s 2020-2021 fiscal year, and were on track to exceed $1.8 billion by 2023-24.
A spreadsheet supplied to The Energy Mix last week by Stand shows the province’s deep well royalty credits increasing from $210 million in 2016-17 to $421 million in 2020-21, then rising again to a projected $657 million in 2023-24.
Communications officer Meghan McRae told The Mix the provincial Ministry of Energy, Mines and Low-Carbon Innovation “will be conducting a comprehensive review of royalty programs to ensure they meet our goals for economic development, a fair return on our resources, and environmental protection.” She added that “the Ministry is committed to getting this right and will take the time necessary to complete the review.”
McRae asserted that “the province does not provide a subsidy to oil and gas producers,” as “credits are not paid or owed by the government to producers—they partially reduce royalties that must be paid when production occurs.”
Stand’s Canadian oil and gas program director, Sven Biggs, acknowledged that the province “does not agree with our definitions of subsidies”. But he said the research was based on global definitions developed by the World Trade Organization and reviewed by the Winnipeg-based International Institute for Sustainable Development, a leading authority on fossil fuel subsidies.
“Importantly, the B.C. government does not object to our classification of Deep Well Royalty Credits as a fossil fuel subsidy, which is the largest and fastest-growing subsidy in the province and the focus of our report,” Biggs told The Mix in an email.
“What they do take issue with is our inclusion of funds that are given to oil and gas companies to reduce the intensity of their emissions through implementing new regulations on methane emissions and by encouraging them to electrify their operations,” he added. “We would argue that these programs clearly fall under the globally agreed-upon definitions of fossil fuel subsidies and that giving subsidies to heavy emitters is the worst possible way to reduce emissions,” when the province already has the regulatory authority to mandate emission cuts.
1,678 Subsidized Wells in Critical Caribou Habitat
DiSilvestro told CP her new research shows 3,114 active oil and gas wells within critical caribou habitat in B.C. Of these, 1,678 wells—just over half—are run by companies that have received assistance from one of three provincial subsidy programs over the past three years.
Previous research has identified industrial use as a major driver of caribou habitat loss and herd declines. Fossil fuel production and logging both damage the old-growth forest caribou rely on and create easy pathways for predators to reach formerly safe hideouts.
“We conclude that public funds are subsidizing caribou extinction,” the report says.
Of B.C.’s 53 caribou herds, 14 are stable or increasing, while 25 herds are either shrinking or have disappeared. No data exists for the rest. Some First Nations have been forced to step in with extreme conservation measures, such as penning up pregnant caribou cows until they can safely calve.
In February 2020, B.C. signed a so-called Section 11 conservation agreement with Ottawa that promised “commitments related to habitat protection and restoration.” That agreement, under the federal Species At Risk Act, was seen as an alternative to the federal government stepping in to impose protections under an emergency protection order.
In an emailed response to CP, McRae pointed to a series of programs the province funds to remediate old wells, including $27 million from industry to clean up wells for which no owner currently exists.
“The province is working with First Nations, local governments, industry, and stakeholders to identify acceptable outcomes for caribou recovery, as well as continued resource development in B.C.,” she told CP. “We continue to work with the federal government on our efforts of conservation and recovery of caribou herds.”
DiSilvestro said the findings suggest conservation agreements made with one hand may be undercut by programs from the other.
“We can say pretty clearly that the [Section 11] agreement isn’t working. The continued subsidization of industry in these areas is a major factor in [caribou] decline.”
Alberta and Saskatchewan also have Section 11 agreements with Ottawa, promising caribou recovery efforts and habitat protection.
The International Institute for Sustainable Development and Environmental Defence, one of several groups studying fossil fuel subsidies that participated in discussions with the researchers, has calculated that Alberta spent about $1.6 billion a year in fossil fuel subsidies between 2016 and 2019. Its work does not detail where that money has been spent.
It doesn’t have equivalent data for Saskatchewan.