12-09-03 During its September auction, Canada's western province, British Columbia, sold $ 418 mm in oil and gas rights, setting a monthly record in Canada and placing the province on track to match Alberta for the first time in approaching the $ 1 bn mark.
The BC auction outstripped the previous monthly high of $ 139 mm set by Alberta in December, 2000, as producers vied for property in a hot region for natural gas prospects in the northeast.

The September sale for rights to drill for oil and gas, conducted through sealed bids and verified, also came close to BC's previous annual high of $ 439 mm in 2001. Over the past two years, BC's government has introduced a series of programs designed to increase petroleum activity by lowering royalty rates and cutting red tape. The vast majority of bids in the latest auction focus on a region that would require deep drilling to extract reserves of natural gas buried in the foothills of north-eastern BC, between Dawson Creek and Tumbler Ridge.
Producers submitted their bids through land companies to protect their identities for competitive reasons. Active explorers for natural gas in nearby northeast parcels include EnCana, Talisman Energy, Apache Canada and Canadian Natural Resources.

BC Premier Gordon Campbell welcomed the record-setting sale. So far this year, British Columbia has raised $ 600 mm at its land sales, compared with $ 636 mm in sales for Alberta's coffers.
"This is certainly a very bright light for us," the BC Premier said. "This truly is a situation where we're encouraging private sector investment, and if we do that, the government will be benefit." While it wouldn't be realistic to quickly expect another massive monthly land sale such as the one for September, BC is benefiting from a surge in petroleum drilling, Mr Campbell said.

The Calgary-based Canadian Association of Petroleum Producers (CAPP) had lobbied the Liberals for changes in energy regulations after the party ousted the NDP administration in May, 2001.
"It has been a meeting of minds. The BC government has recognized the need to become competitive," CAPP vice-president Greg Stringham said. Royalty credits of up to $ 4.1 mm per well were introduced recently to encourage deep-well drilling, which is expensive. The area south of Dawson Creek is getting new roads to provide greater access to rigs, and a new pipeline is slated to be built in the region soon.

The brisk activity in British Columbia also involves another portion of the province's northeast, with companies such as EnCana stepping up their drilling programs. BC Energy Minister Richard Neufeld said that hectic summer drilling by EnCana at its Greater Sierra play is one indication of how petroleum companies are attracted to a region that's proving to be rich in natural gas.
The Greater Sierra region, east of Fort Nelson, is turning out to be the largest gas field discovered in Western Canada in the past decade. Preliminary estimates peg the area's recoverable reserves at 2.5 tcf, or more than five timesthe size of the Ladyfern gas play near Fort St John.

In the NDP's last full year in power in BC in 2000, the province sold $ 248 mm in oil and gas rights. Even in downturns, Alberta raises at least $ 500 mm a year at its auctions. Alberta holds the annual record for land sales, attracting $ 1.15 bn in bids in 1997 and surpassing the billion-dollar mark again in 2000 and 2001, according to figures compiled by CAPP.
Mr Campbell said his government wants to send out the message that BC is open for business.
"One of the things that we're trying to do with industry is ask them, 'What does it take for you to come and be part of our future in British Columbia?' So, we changed the royalty regime for deep wells, low-productivity wells, coal-bed methane and summer wells. Our goal is to get investment."