BC Natural Gas Reserves Inflated, Revenues Overstated, Report Finds
Analyst David Hughes offers another challenge to the province’s nascent industry.
A new report on liquefied natural gas prospects for British Columbia challenges government claims that gas exports will lower greenhouse gas emissions, or generate $100 billion in profits for the province.
The report published today by David Hughes, one of Canada’s foremost energy analysts and a former federal government geoscientist, also contends that the provincial government has vastly overestimated the amount of gas available for export.
The National Energy Board has approved 12 export licences to Asia or the United States with another seven under review along the B.C. coast.* The provincial government, which has lowered taxes and royalties to promote the new industry, expects only three to five terminals may be eventually built.
Due to depressed oil prices, global competition and cost over-runs in the capital intensive industry, not one project has yet announced a final investment decision.
Government fact sheets claim, for example, that “British Columbia’s natural gas supply is estimated at over 2,933 trillion cubic feet,” or enough gas to last 150 years.
But Hughes notes the B.C. Oil and Gas Commission estimates raw gas reserves (gas that can be drilled and recovered based on existing economics and well data) for the province at 42.3 trillion cubic feet.
The commission calculates “marketable resources,” or what industry might be able to find, drill and frack — a highly uncertain figure, due to high decline rates and the spotty nature of unconventional shale resources — at 442 trillion cubic feet.
As a result, Hughes calls the government’s inflated figure of 2,933 trillion cubic feet, or 70 times more than proven reserves listed by the commission, “a false and irresponsible statement.”
Windfall profits questioned
Government claims about earning windfall profits from gas exports also have no basis in real economics, Hughes argues in his report.
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