Annual Service Plan Reports 2004/05 -- Ministry of Energy and Mines

Thriving, competitive, safe and environmentally responsible energy and mining sectors significantly benefiting all British Columbians.

Mission

The Ministry of Energy and Mines facilitates investment in the responsible development of British Columbia's energy and mineral resources to benefit British Columbians.

Values

The following values define the Ministry of Energy and Mines' management style and positions it to achieve its Service Plan goals and objectives.

Advocacy

The ministry works with the energy and mining sectors, advocating their interests to broader stakeholder groups in a way that ensures the responsible and sustainable development of energy and mineral resources.

Integrity

The ministry is committed to respectful, honest and ethical behavior in all its communications and actions.

Responsiveness

The ministry is service-oriented and responds to the needs of its stakeholders and the public in a timely and effective manner.

Accountability

The ministry is accountable to government and the public for the results identified in its Service Plan. The ministry is effective and efficient in delivering timely services and implementing sound financial management.

Professionalism

The ministry is committed to maintaining the highest levels of both technical competency and public service values, and encouraging innovation and creativity.

Partnership Building

The ministry promotes teamwork, good working relationships and effective partnerships with others.

Ministry Overview, Core Business Areas and Structure

Ministry Overview

The ministry is tasked with directing the responsible development of British Columbia's energy and mineral sectors. Natural gas is now the single largest source of provincial revenue derived from a natural resource. As commodity prices for natural gas, oil, electricity and minerals remain strong, British Columbians can expect to see continued benefits and resource development opportunities. The ministry's strategy is to increase investment and revenue related to all energy and mineral sectors, while acting as an environmental steward protecting the land base for future generations.

MEM administers 25 statutes pertaining to the energy and mineral sectors. In addition, the Minister of Energy and Mines is responsible for the Assayers Certification Board of Examiners, British Columbia Hydro and Power Authority, British Columbia Transmission Corporation, Columbia Power Corporation/Columbia Basin Trust, Mediation and Arbitration Board and the Oil and Gas Commission.

The ministry's core businesses and how they are organized are summarized and described below.

Core Business of MEM	Organization within MEM
1. Oil and Gas	Oil and Gas Division — Develops and implements policies and programs to maximize the benefits from oil and gas resources. Oil and Gas Titles Branch, Titles Division — Issues and administers tenures for Crown oil and gas rights. Offshore Oil and Gas Team — Established to enable offshore oil and gas development to occur in British Columbia in a scientifically sound and environmentally responsible manner.
2. Mining and Minerals	Mining and Minerals Division — Develops and implements policies and programs to manage the exploration and development and marketing of coal, aggregate, industrial minerals and metal resources. Mineral Titles Branch, Titles Division — Issues and administers mineral and coal exploration and mining tenures.
3. Electricity and Alternative Energy	Electricity and Alternative Energy Division — Develops and implements policies and programs to support all forms of electrical power generation, alternative energy sources, energy conservation and efficiency measures.
4. Executive and Support Services	Marketing, Aboriginal and Community Relations Division — Provides corporate support and services, leads investment promotion, community engagement and facilitates First Nations participation in the energy and minerals sectors. Management Services Division — Provides various financial and administrative services, on a shared services basis with the Ministry of Small Business and Economic Development.

Oil and Gas

Oil and Gas Division

The Crown owns the vast majority of the Province's petroleum and natural gas. The Oil and Gas Division is the steward of these resources and is mandated to protect the public interest in petroleum and natural gas development and ensure that benefits from resource development are maximized for all British Columbians. In 2004/05, Provincial Government revenue generated directly from the production of oil and gas in British Columbia was approximately $2 billion, or about eight per cent of total provincial revenues. Abundant hydrocarbon reserves in northeastern British Columbia, and potential resources in various other parts of the Province, indicate oil and gas revenue will continue to play an important role in the provincial budget. The Oil and Gas Division develops and implements policies and programs to maximize the benefits from British Columbia's oil and gas resources, including increasing provincial revenues and private sector business opportunities through innovative oil and gas infrastructure and royalty programs, promoting British Columbia's geological potential and enhancing the business climate for British Columbia's oil and gas service companies.

Titles Division — Oil and Gas Titles Branch

The Oil and Gas Titles Branch issues, administers and collects revenues for tenures to Crown-owned oil and gas, underground gas storage and geothermal resources. The efficient administration of these subsurface rights generates more than $300 million in annual revenue and attracts energy sector investment to British Columbia.

Offshore Oil and Gas Team

The Offshore Oil and Gas Team was established to enable offshore oil and gas development to occur in British Columbia in a scientifically sound and environmentally responsible manner. The Province of British Columbia believes that the potential opportunities provided by offshore oil and gas development are of significant public value. The Province is taking a principled approach to researching management and regulatory regimes in other jurisdictions in order to identify best practices for west coast offshore development. Moving forward, the team will continue to work with communities, First Nations, the Federal Government and key stakeholders. The Offshore Team's focus through 2007/08 is to complete various components of the Offshore Team Project Plan. The core elements of this plan are to work with First Nations and all coastal communities to identify their concerns and establish solutions, develop options for a comprehensive regulatory regime and further the state of scientific knowledge pertaining to BC offshore energy resources.

Mining and Minerals

Mining and Minerals Division

Mining has fueled economic development throughout the province since the first Gold Rush nearly 150 years ago. British Columbia is rich in mineralization and is ranked high by companies with respect to mineral resource potential including coal, aggregate, industrial mineral and metal resources. Mining revenues and jobs are increasing as commodity prices, government policies and investor confidence are attracting the mining industry to develop these rich resources. The Province is committed to attracting exploration investment and building the mining industry in order to ensure benefits for all British Columbians. The Mining and Minerals Division develops and implements policies and programs to attract investment, manage the exploration and development of mineral resources, while ensuring involvement of communities and First Nations, environmental stewardship of the land and the protection of mine workers and the public. The Mining and Minerals Division is responsible for the implementation of the British Columbia Mining Plan.

Titles Division — Mineral Titles Branch

The Mineral Titles Branch issues, records and collects revenues for tenures to Crown-owned mineral, placer and coal resources. In January 2005, the Titles Division implemented Mineral Titles Online, British Columbia's innovative, internet-based mineral claim acquisition and maintenance system.

Electricity and Alternative Energy

Electricity and Alternative Energy Division

The Electricity and Alternative Energy Division develops and implements policies and programs to support all forms of electrical power generation, alternative energy sources, energy efficiency measures, and leading edge technologies. Energy, economic and environmental policies are intertwined. As British Columbia's economy strengthens and diversifies, it continues to rely on low-cost electricity. At the same time, British Columbians are committed to environmentally responsible energy development and energy efficiency. The government is dedicated to striking a balance between the development of conventional sources of electricity in a responsible manner, and developing policies that will lead to the use of new and alternative sources. The Division is responsible for implementing the electricity and alternative energy policy actions in "Energy for Our Future: A Plan for BC" and assists the Crown Agencies Secretariat in developing and implementing provincial policy with respect to BC Hydro, British Columbia Transmission Corporation (BCTC) and Columbia Power Corporation (CPC).

Executive and Support Services

Marketing, Aboriginal and Community Relations Division

The Marketing, Aboriginal and Community Relations Division leads the ministry's aboriginal and community stakeholder strategy, investment promotion and marketing, corporate policy, intergovernmental relations, strategic planning, legislation, strategic human resources and executive support and services. The Division is responsible for the ministry's objective of strengthening its relationships with First Nations and communities in the development of energy and mineral resources throughout the province. The ministry aims to increase First Nations participation in these resource sectors through consultation and accommodation initiatives. The Division leads strategies to implement the ministry's goal of being an "exemplary organization and a ministry of choice as an employer in the British Columbia Public Service," requiring the ministry to have the best human resources practices on behalf of its employees and government. The Division is also responsible for the administration of the Mediation and Arbitration Board.

Management Services Division

The Management Services Division is a shared service provided to the Ministry of Energy and Mines and the Ministry of Small Business and Economic Development. Management Services' responsibilities include financial services and payroll, financial reporting and monitoring, facilities, administration, fleet management, library resources, information systems, records management and information and privacy (freedom of information administration), both directly and through service level agreements and liaison with Shared Services Agencies. The Division has two branches supporting the ministry, the Finance and Administration Branch and the Information Management Branch.

Ministry Operating Context

The oil and gas, mining and mineral and electricity and alternative energy sectors collectively, and directly, employ over 30,000 British Columbians. Indirectly, those sectors 'fuel' employment in many other service sectors that results in thousands more jobs. Estimates suggest nearly 100,000 British Columbians receive their paychecks as a result of energy and mineral sector activity. In addition, the direct revenue derived from these sectors totals over $2 billion annually which funds provincial government programs for health care, social services and education. The energy and mineral sectors are directly and indirectly affected by many factors inside and outside the sphere of influence of the government. For example, the Provincial Government has no control over weather and climate, however, those factors have significant impact on the development of energy and minerals in the Province. In planning its programs and service delivery, the ministry reviews all societal indicators that could, negatively or positively, affect the responsible and sustainable development of energy and mineral resources.

Overview of Societal Indicators:

Energy Costs

Higher energy prices, particularly for oil, natural gas and related by-products (e.g., transportation fuels) are increasing consumer concern and awareness regarding choices they make for meeting their home, business and transportation energy needs.

Skilled Labour

A shortage of skilled labour to support the oil and gas, mining and minerals and electricity and alternative energy sectors are posing increased challenges to the energy and mineral sectors.

Environmental Concerns

Virtually all of the current provincial and federal interactions with respect to the energy and mineral sectors are significantly influenced by Canada's obligations under the Kyoto Protocol. This pervasive issue remains difficult for governments to manage because, while perceived by many as an environmental issue, the implications in the near term are largely economic. The timeframe for action, measured in decades, tends to challenge governments faced with more immediate demands for limited financial and public sector resources.

Technological Change

Technological innovation is seen as a key indicator of progress in the energy and mineral sectors. Many view it as a solution for addressing escalating costs, enhancing security and addressing environmental issues.

Provincial Infrastructure

British Columbia's electricity generation, transmission and distribution infrastructure is aging with many components nearing the end of their useful lives. Utilities will increasingly be faced with decisions regarding the ongoing maintenance of assets versus replacement. Transportation infrastructure for oil and gas, including roads and pipeline transmission, and rail and road transportation infrastructure for the mining and mineral sectors, also require substantial investments to build new or maintain existing infrastructure.

Growing Awareness of Opportunities for Sustainable Energy Use

Many British Columbians are interested in shifting their energy consumption towards a greater reliance on renewable sources, and getting more out of the energy they use by increasing energy efficiency and reducing demand.

Meeting Energy Needs of a Growing Economy

As the British Columbia economy grows, energy suppliers, utilities, regulators and governments are challenged as to how to meet the resulting demands for energy in a manner that balances objectives of low cost energy that supports economic growth with environmental and social responsibility.

First Nations Participation

The Province has a lawful obligation to consult with First Nations and address and/or reach a workable negotiated solution with respect to asserted aboriginal interests. Increased activity in energy, mining and mineral exploration has led to increased demands on First Nation communities to respond to volumes of referrals generated by numerous tenure and permit applications.

Evaluation of Resources

British Columbia has an enormous undeveloped energy and mineral resource base estimated to be worth billions of dollars. This resource base includes unconventional resources such as: coalbed gas, offshore oil and gas, tight gas, interior basins, marginal resource plays, new mineral deposits and cutting edge alternative energy such as tidal, wind and geothermal. Significant additional evaluation of these resources must be undertaken to promote investment.

Mineral Markets

Industry is forecasting a significant increase in the total dollars spent in mineral exploration in the province. Preliminary indicators suggest mineral exploration investment in British Columbia during 2005 will climb to between $150 million and $200 million. The industry is projecting continued increases in exploration spending as demand for mineral commodities and prices continue to rise on world markets. British Columbia's challenge is to develop new resources in a responsible manner and then market these commodities in a competitive and cost effective manner.

Community and Stakeholder Engagement

Communities are calling for enhanced engagement pertaining to energy and mineral development in their regions. Government's challenge is to facilitate the building of strong relationships between communities, First Nations, industry and government concerning the development of the Province's wealth of energy and mineral resources.

New Era Commitments

The Ministry of Energy and Mines has successfully addressed all " New Era Promises" that relate to its core businesses.

*New Era* Promises
Government Priority	Comments
*Oppose the Sumas 2 power projects and phase out Burrard Thermal.*	Completed. The Province, led by the Ministry of Water, Land and Air Protection, was an intervener in the review of the Sumas Energy 2 power project before the National Energy Board. On March 4, 2004 the NEB announced that it was denying SE2's application for an international power line. BC Hydro is considering the phase out of Burrard Thermal as a part of its Integrated Electricity Plan. BC Hydro's planning assumptions post 2014 do not include any energy from Burrard.
*Protect BC Hydro and all its core assets, including dams, reservoirs and power lines under public ownership.*	Completed. The BC Hydro Public Power Legacy and Heritage Contract Act was brought into force in late 2003. This Act stipulates that BC Hydro must not sell or otherwise dispose of protected assets.
*Restore an independent BC Utilities Commission to regulate BC Hydro's electricity rates.*	Completed. Additional Commissioners and changes to the Utilities Commission Act, which were brought into force in May 2003, create a strengthened and more effective British Columbia Utilities Commission (BCUC) for oversight of BC Hydro. The rate freeze was eliminated, and in October 2004 the BCUC issued its first BC Hydro Revenue Requirements Decision in a decade. The BCUC also approved BC Hydro's electricity purchase agreement for the proposed Duke Point power project.
*Encourage mineral exploration.*	Ongoing. In order to have a healthy, sustainable mining industry in British Columbia, it is essential to have a robust mineral exploration sector. The mining industry estimates that annual exploration expenditures of at least $150 million are required to sustain the industry's production. The ministry will continue to enhance mineral exploration in British Columbia through the strategies and actions in the British Columbia Mining Plan. During 2004 over $130 million was spent in exploration and this is expected to increase substantially in 2005. In 2004/05, the ministry increased tenure security and provided administrative savings for industry by introducing an internet-based system for mineral claim acquisition and maintenance called Mineral Titles Online.
*Promote clean and renewable alternative energy sources like wind, thermal, solar, tidal biomass and fuel cell technologies.*	Ongoing. As part of the Energy Plan, there is a goal of having 50 per cent of the new supply purchased by electricity distributors from clean sources. The ministry works closely with independent power producers (IPPs) to facilitate the development of these energy sources. In 2004/05, 100 per cent of new electricity supplies came from clean sources. Five new independent power projects and an expansion to an existing plant began commercial operations adding 460 GW.h of electricity to the provincial grid. This represents a 7 per cent increase in the amount of clean, alternative and conventional electricity generated on the BC Hydro system by IPPs. The ministry is providing staff and financial support to the Alternative Energy and Power Technology Task Force. The ministry participated in the industry committee's development of a hydrogen and fuel cell strategy for the province, which subsequently received $2 million in Provincial funding to assist with implementation. In addition, the ministry supported the nascent geothermal energy industry by granting approval for the drilling of three deep geothermal wells.