IRJ Exclusive: Interview with Blair Lekstrom

British Columbia's oil and gas industry is heating up and it seems as though the rest of the world is noticing. CBJ's Jennifer Sorlie had the opportunity to chat with B.C. Minister of Energy, Mines and Petroleum Resources Blair Lekstrom about the province’s oil and gas success, its priorities and what else we can expect from the industry.

JS: Would you mind describing your role, Minister Lekstrom?

BL: I’m responsible for energy, mines and petroleum here in the British Columbia. It is the ministry that is driving the economic wellbeing of the province right now, especially with the significant growth in our oil and gas industry in recent years.
In response to the growth, we have had to create a whole new playing field so the global industry feels good about investing in British Columbia. And we have done that. A lot of people think we compete strictly with Alberta, when, in fact, we’re competing with Texas, Louisiana and regions all around the world. We have established ourselves as one of the best jurisdictions in which to invest.

JS: What is British Columbia doing to draw that investment?

BL: The oil and gas industry wants to work in a jurisdiction with a healthy taxation and regulatory environment. That’s why, as of August 2009, British Columbia came out with a new oil and gas stimulus package to enhance our competitive business climate. It has attracted a significant amount of interest. For example, we have implemented taxation initiatives and regulatory changes, such as deep royalty credits, infrastructure credits and amendments to drilling license regulations.
The goal for the province is to create certainty for the industry. The key, from my perspective, is to ensure open dialogue, so we know what’s working and what’s not. We don’t want to blindside anyone with decisions, and our up-front approach has worked extremely well.
We are looking for a favourable partnership. It doesn’t mean we agree with the industry on everything (which is how life goes), but we respect the work they do. We also respect the individuals who live in the affected regions, so they are included in that dialogue too. It’s about finding the balance between using the resource and maintaining quality of life.

JS: Tell us about the Horn River and Montney shale gas plays and why they are economically viable for B.C.?

BL: Horn River is a relatively new basin play, just outside of Fort Nelson, with roughly 250 trillion cubic feet of gas in place, which is significant. The Montney play, by Dawson Creek, holds roughly 300 trillion cubic feet of gas—again, a very significant find. It is more mature than Horn River—it’s been around for close to 10 years—but it continues to develop and has far more infrastructure.

These unconventional gas plays are two of the top three plays in North America. Together, they set us up with the shale and tight gas to be one of the leaders in our continent. It’s a great opportunity to diversify our markets, not only south of the border, but on the Asia-Pacific side of things with liquefied natural gas. I think the potential is considerable. We look at these plays and, as the industry works on them, it seems they are growing in size virtually every week or month, because of technology we use on the field.

JS: How are natural gas prices affecting the industry in B.C.?

BL: The price of natural gas is an extremely important part of any industry. When gas was down to just above $2, there was a huge concern. But we are seeing recovery. I am an optimist; I believe prices will recover substantially from where they are today. One of the main reasons for my optimism is because we see the effects of climate change on our planet, and we are look for new ways to do our part. Many people wonder how you can talk about climate change in the same breath as gas production, but natural gas is the cleanest burning fossil fuel on the planet.

As the U.S. transitions out of coal fire power generation, one of the easiest and most effective transitions would be combined cycle gas turbines, fired by natural gas. It would reduce the GHG footprint by about 37 per cent, just by that switch. Fuel switching is a key part of reducing GHG emissions, whether it be in our electricity or transportation; there is significant opportunity there and B.C. is really establishing itself to respond. What we do today is for the future, and we’re seeing benefits there.

JS: Where do you see the B.C. oil and gas industry in five years?

BL: The industry, people and government in B.C. are focused on ensuring oil and gas companies maintaining their social license to operate. What I mean by that is the ability to operate and extract resources, while looking after the concerns of the people, including roads, safety, being good neighbours and making sure the needs of the people in the region are met. It boils down to respect.

We have come a long way in that respect. There is still work to do, but I give the companies a great deal of credit; it is an initiative they knew we had to work together on. The communities were strong supporters of that, too. We continue to ensure that as this resource works for B.C., it means more than just lease-sale revenue or resource revenue to the province, but it means benefits to the communities where this activity is taking place. When I look to the future, I think that is one of the most important things to work on.