Energy revenues

The province hasn't looked back since, and the government forecasts continued high revenues into the future.

Provincial natural resource revenues matched forestry revenues in 2000, and completely overwhelmed forestry in 2001. Energy will be the dominant resource revenue for the province for a few years to come. [see revenues chart]^{[ 1]}

Energy revenues come from five main sources: [see breakdown chart]

• Royalties, mainly from natural gas ($1213 million in fiscal 2004 ending March 2005)
• Drilling licenses and leases, again, mainly for natural gas ($1038 million)
• Water leases, mainly to BC Hydro ($402m)
• BC Hydro payments to government ($388m)
• Downstream Benefits from the Columbia River Treaty ($215m)^{[ 2]}

It isn't just demand for energy that's pushing these revenues, however.

What market forces cannot achieve alone, the provincial government is attempting to make happen by other tricks in the energy policy - giveaway royalty schemes and lookaway regulatory regimes.

The energy revenue jump in 2000-2001 was primarily a windfall in electricity sales to California, and to a lesser extent to Oregon and Washington. Subsequently, it has been ramped up production of natural gas, and a big jump in drilling licenses that has kept energy revenues so high. [see natural gas price chart?]

Before long, however, the "easy" gas money from the province's northeast, overlying the Western Canadian Sedimentary Basin, will be tapped out.

The government approach is to create incentives for companies to move into marginal fossil fuel areas - hard (and expensive) to get coalbed methane, deep gas, remoter and unexplored fields, and offshore.

[1] Natural resources are not everything to government. In a $30 billion budget, slightly less than half of revenues are from taxes - income, corporate, sales, you name it. In 2007, the provincial government forecasts $1 billion from forestry, $3 billion from energy - and $2.7 billion from gambling.

[2]The Columbia River Treaty between Canada and the United States included a number of new dams on the Columbia and Kootenay River systems in British Columbia. These Canadian dams enabled power generation at other dams downstream, in Washington State. A portion of that power generated in the U.S. belongs to the province of B.C. and is referred to as Downstream Benefits or DSBs. The DSBs are sold in the U.S., and the revenue accrues directly to the province - it is not treated as revenue from BC Hydro.