BURST
The B.C. Conservatives are calling for an investigation by B.C.’s auditor general into how the Ministry of Energy and Climate Solutions miscalculated revenue from natural gas royalties by almost $1.5 billion over the next five years and why Premier David Eby claimed to know nothing about it.
“This is huge. This is a stand-alone scandal, big enough to take down the government,” said Gavin Dew, the B.C. Conservative finance critic.
“There’s really two scandals here. The first is how do you get a revenue forecast that is dramatically wrong by $1.5 billion, and the second is what happened after people inside government were warned that it was wrong?”
The error was revealed by Business in Vancouver in a story published this week . Its investigation found the shortfall could be closer to $500 million a year, or $2.5 billion over five years.
The calculations made by experts BIV consulted were based on the 2026 provincial budget and found the government failed to account for transportation and processing costs.
Premier David Eby told reporters on Tuesday he had no knowledge of any miscalculations when it comes to the royalties B.C. receives from natural gas production.
On Wednesday, the Energy Ministry said it had been informed of the error in July.
A ministry spokesperson said an internal review was launched and found “an administrative error relating to unit and currency conversions” used in the price forecast for natural gas.
“It is incorrect to claim that this was due to a lack of accounting of transportation and safety costs,” the spokesperson said, adding that as a result, calculations for the 2026 budget were corrected.
However, a First Nations chief disputes both Eby and the ministry’s timeline.
Chief Roland Willson of the West Moberly First Nations said he spoke to the premier on July 14 and personally handed the premier a letter that day outlining the concerns of Treaty 8 nations about how the government calculated natural gas revenue for the coming years. He also said his technical team had informed Energy Minister Adrian Dix of the problems back in June.
Willson said that Treaty 8 Nations have been negotiating the province’s new framework for natural gas royalties for the past four years and the nations have been disputing the government’s estimates of how much it will bring in.
The new royalties are scheduled to go into place on Jan. 1 and will account for the costs of the production process, not just revenue. However, details of the new system’s specific calculations have not been released.
“He told us that the message was received, and that he’d have his people look into the error and get back to Treaty 8 right away. B.C. has never responded to our letter,” Willson said.
“This is a much, much larger problem than what B.C. is making it out to be.”
The Office of the Auditor General said it would not comment on the details of any audit that might be in progress and that “the information that contributes to our reports is offered by way of parliamentary privilege — which is granted by the legislative assembly.”
A spokesperson for the office also said that because the matter involves the current fiscal year, it falls under the mandate of the comptroller general.
SFU economist Nancy Olewiler, one of the experts consulted by Business in Vancouver, said the shortfall could be as high as $3.5 billion over five years and disputed the government’s justification of an “administrative error,” saying it does have to do with the failure to account for the cost for transportation and processing.
Olewiler said that it is hard to calculate what the total amount will be given the lack of transparency by the province, but that final revenue for government from natural gas could be anywhere from $300 million to $700 million a year.
She says that even the more conservative estimate would have enormous implications for the provincial budget.
“You add it up, and over three or four years, you’re a billion dollars less. Now, in total, the budget’s a lot bigger than that, but every dollar counts,” said Olewiler.
“The industry deserves a fair return on its investment, there is no quibble with that, but if we’re giving away more to the industry than we’re getting back , then that’s money that can’t be spent on health care and education and everything else.”
UBC economist Werner Antweiler said government needs to be forthcoming with how it is estimating its resource revenues.
But, he believes the new royalty system will be much fairer and reflect the maturation of B.C.’s oil and gas sector.
“Originally, B.C. had a more generous system than Alberta to attract investment here and sort of basically jump-start the natural gas industry, and now we’re getting to the point where the industry is more mature, and the government is saying, well, now we should be moving to a modern system of royalties,” said Antweiler.