The B.C. government’s flurry of policy changes to encourage oil and gas investment in the province is certainly paying dividends.

Now the big question is: Do Gordon Campbell’s Liberals know the difference between well-crafted incentives and damaging exploitation?

The province is forecasting a record of more than $2 billion in oil and gas revenue for the fiscal year ending March 31, 2004.

That includes an unprecedented $696 million for oil and gas leases, spurred by EnCana Corp.’s $369- million drilling rights purchase in the Cutbank Ridge play southwest of Dawson Creek in September.

B.C.’s Ministry of Energy and Mines expects 1,144 oil and gas wells to be drilled in the province in 2003, which would also set a record.

In a new round of initiatives, the government recently committed an additional $20 million a year – for a total of $30 million a year – in royalty credits for improved year-round road infrastructure to increase access to oil and gas and other natural resources.

Fine, so far. What’s worrisome is the government’s plan to remove an 11-kilometre, 1,036-hectare corridor of land from Graham Laurier Provincial Park west of Fort St. John, to accommodate an oil and gas exploration road or a pipeline.

Sure, the Liberals promise to turn the property into parkland again when it’s no longer needed. But if the new road leads to oil and gas riches, there’s no guarantee that will ever happen.

It sets a troublesome precedent when politicians arbitrarily carve out a chunk of a park simply to accommodate development. What’s next – drilling rigs off Long Beach?

Environmentalists also say the government is planning changes to B.C.’s Parks and Protected Areas Act, to allow directional drilling for oil and gas under all parks and protected areas.

Campbell’s Liberals have so far been able to balance the province’s need to more efficiently tap its oil and gas resources while keeping the “Super” in Super Natural B.C.

It’s a delicate balance. The government would be wise not to upset it.

GUSH OF SPENDING

Oilsands development will continue to fuel Alberta’s – and especially Edmonton’s – economy throughout 2004.

Petro-Canada will spend $1.2 billion, including $50 million this year, to convert its Edmonton refinery to process oilsands crude.

The company plans to spend a total of $2.6 billion to upgrade the plant. That includes $1.4 billion in ongoing work to ensure the refinery’s 135,000-barrels-per-day output of gasoline and diesel complies with new federal regulations limiting the amount of sulphur in fuel.

Petro-Canada and Suncor Energy Inc. also announced an agreement whereby Suncor’s Fort McMurray oilsands facility will process at least 27,000 barrels per day (b/d) of bitumen from Petrocan’s MacKay River oilsands operation into sour crude.

As part of the minimum 10-year deal – expected to take effect in 2008 – Suncor will sell an additional 26,000 b/d of sour crude production to Petrocan. The total combined volumes of sour crude oil will be shipped to Petrocan’s Edmonton refinery for conversion into finished product.

The corporate Santa Claus brought another present to the Edmonton area.

BA Energy Inc., a member of the Calgary-based Value Creation Group of Companies, plans to build and operate a 150,000 b/d oilsands upgrader in Strathcona County.

The Heartland Upgrader, to be developed in three phases, is expected to cost more than $1 billion and create 2,000 construction jobs at its peak. Construction could start in late 2004.

LAND ADVOCATE

The B.C. Oil and Gas Commission (OGC) has shown foresight in creating the new position of “landowner liaison inspector.”

The OGC hired Kelly Cook for the job. Cook has 13 years’ experience as a senior range technician in Merritt, B.C., where she reviewed range-use plans and provided landowners with advice and information on range and cattle management issues.

Cook, who’ll be based at the OGC’s office in Fort St. John, will plan, develop, implement and manage a program that will enhance positive relations among the industry, stakeholders, agricultural producers, landowners and the OGC.

She’ll also ensure that oil and gas activities follow regulations, standards and best business practices to minimize impacts on landowners.

Cook’s position is more than a fancy title. The OGC says she “will have the legal authorities to order remedial work or shut down non-conforming activities.”

FROM 'NET TO BEST BET

Another casualty on the information superhighway has traded its Internet dreams for the down-to-earth business of oil and gas.

RightsMarket Inc. of Calgary, a provider of ’Net-based information security solutions, has transformed itself into Grand Petroleum Inc.

Court of Queen’s Bench has approved the company’s reorganization and $5 million in new capital injection (from the issue of five million shares at $1 per flow-through share) into a new oil and gas exploration and production company.

Grand Petroleum, led by president and CEO Andrew Hogg, says it produces more than 400 barrels of oil equivalent a day from two wholly owned and operated properties in southeast Alberta.

And what of RightsMarket Inc.? Its existing technology, assets, liabilities and obligations, along with $425,000 in cash, have been transferred to a new company, RightsMarket Ltd. Hmmm, sounds familiar.

John Krpan

John Krpan, who joined RightsMarket Inc. as CEO after a stint as chief operating officer at Calgary-based Cell-Loc Inc., will step down as chief executive “for personal reasons” but will remain as a director of RightsMarket Ltd.

Cell-Loc’s tale has a similar twist. The wireless location-tracking company’s market capitalization shrank to $20 million from a March, 2000 high of $1.6 billion.

The company completed its transformation into an oil and gas exploration firm, Capitol Energy Resources Ltd., in December – with the help of $4.9 million in private investment.

Cell-Loc’s existing technology assets and $2.8 million in cash were trundled off to a new firm, Cell-Loc Location Technologies Inc.

CAPACITY UPPED

Enbridge Inc. of Calgary and rival Terasen Pipelines Inc. of Vancouver continue their race to boost pipeline and refining capacity to handle future output from new Alberta oilsands projects.

Terasen will increase shipping capacity of its Express Line to 280,000 b/d from 172,000 b/d, a project expected to cost about $100 million. The line runs from Hardisty, southeast of Edmonton, to Casper, Wyo.

At Casper, the Express Line connects with the Terasen-operated Platte system, which can take Canadian crude into the U.S. Midwest.

Enbridge, meanwhile, is buying crude oil pipeline and storage systems in Oklahoma and Illinois from Shell in two deals totalling $140.5 million US. The systems, which serve refineries in the Mid-Continent from North America’s crude oil hub in Cushing, Okla., will provide Canadian producers access to new markets for their crude oil.

Enbridge also says it has closed its $247-million US purchase of the North Texas System, which gives the company more than 3,200 kilometres of natural gas-gathering pipelines, five processing plants, an average daily gas production of about 170 million cubic feet per day, and access to gas reserves in the U.S. Mid-Continent and Gulf Coast regions.