Oil and Gas Permits Relinquished: Companies Give Up Exploratory Tenure in BC
BC’s NDP government is making oil and gas permits companies think twice about holding onto unused exploration tenure. Several tenure holders have opted to relinquish their oil and gas permits, in what some are calling a sign of declining interest in expanding hydrocarbon development in the province.
In the last year, major tenure holders like Shell Canada, Petronas, and BHP Billiton have given back oil and gas permits covering over 1 million hectares of northeastern BC. According to the BC Oil and Gas Commission (OGC), the companies cited changing business priorities and uncertainty in market conditions as reasons for relinquishing oil and gas permits without drilling.
With the relinquishments, the total area under oil and gas permit tenure in BC has decreased for the first time since the commission began tracking figures in 2013. At over 22 million hectares, the current tenure area is still substantial but shrinking as companies reconsider their prospects. “It seems the regulatory environment and questions around future oil and gas projects are making some firms re-evaluate whether maintaining oil and gas permits is worthwhile,” said analyst Andrew Logan.
What’s Behind the Declining Interest in Oil and Gas Permits?
A combination of factors are likely at play. The BC government has tightened rules around tenure and introduced new climate policies that increase costs for obtaining oil and gas permits. At the same time, LNG Canada’s decision to move forward with a massive export terminal boosted confidence in near-term gas projects but did little for oil prospects.
With commodity prices also fluctuating, some tenure holders may feel it’s better to relinquish non-core oil and gas permits rather than pay fees to extend permits with no concrete plans. Regardless of the specific reasons, the pattern of relinquishments suggests ebbing enthusiasm for new oil and gas exploration in BC.
Whether this decline continues remains uncertain. Industry observers say a rebound in commodity prices could renew interest in acquiring new oil and gas permits, as could changes to provincial policies.
For now, though, it seems BC’s once red-hot oil and gas sector is facing a cooler reception, at least when it comes to taking on new exploration acreage. Major tenure holders are relinquishing oil and gas permits in droves, leaving a smaller footprint and sending a signal the outlook may not be as rosy as it once seemed for expanding hydrocarbon development in the province.
