British Columbia acknowledges $1.5-billion error in natural gas royalty forecast

VICTORIA — The British Columbia government has acknowledged that an administrative error in its latest budget overstated projected natural-gas royalty revenue by nearly $1.5 billion over five years. The Premier’s Office says correcting the mistake will reduce the forecast by an average of approximately $292 million annually, with revised figures expected in the province’s September financial update. The error concerns revenue B.C. expected to receive in future years—it does not mean the government misplaced or spent $1.5 billion.

The discrepancy involves the price assumptions used to forecast royalties under B.C.’s transitional natural-gas system. Royalties are calculated using the “plant inlet price,” which accounts for the market value of gas after transportation and processing costs are deducted. Simon Fraser University economist Nancy Olewiler found that those costs were not properly subtracted from the province’s budget forecast, substantially inflating the expected public share of industry profits. Independent estimates suggest the overstatement could approach $500 million per year, considerably more than the government’s calculation.

The admission is particularly consequential because B.C. is preparing to introduce a new oil and natural-gas royalty framework on January 1, 2027. The system was developed after an independent review found the former framework was failing to provide British Columbians with an adequate return from publicly owned resources. The forecasting error now raises questions about whether the new model will generate the additional revenue previously promised and places added pressure on the government to release complete calculations in its September update.