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Glimmers of light in the Canadian North After 12 years deficit-free, Ottawa plans shortfalls of C$85B over 5 years; changes in project regulatory requirements possible Gary Park For Petroleum News
In getting to grips with what it calls a “deepening economic crisis,” the Canadian government is ending 12 years of deficit-free budgets and running up shortfalls of C$85 billion over the next five years, with a heavy emphasis on infrastructure spending.
For Canada’s North there were some reasons for hope in the economic stimulus budget unveiled by Finance Minister Jim Flaherty on Jan. 27, including measures that could speed up regulatory approval of the Mackenzie Gas Project.
The government has earmarked C$37.6 million for the 2009-10 fiscal year to support the regulatory and environmental assessment processes related to the proposed Mackenzie Valley gas pipeline.
Northwest Territories Industry Minister Bob McLeod told Petroleum News he welcomes word that a federal offer was presented to the MGP partners earlier in January and views the budget allocations as evidence that the government is “serious about the pipeline” by putting the necessary funding in place for various federal departments and preparing for aboriginal consultation.
In addition, Infrastructure Minister John Baird said before the budget was unveiled that Ottawa plans to remove some of the environmental roadblocks that slow progress on major resource development, but there was no indication these changes would come in time to benefit the MGP.
Economic development agency Coming just three months after Prime Minister Stephen Harper insisted Canada would not allow a return to budget deficits, the economic stimulus package is also Harper’s attempt to cling to power.
The New Democratic Party and Bloc Quebecois will vote against the budget, while Liberals — who control the balance of power — will support the budget provided Harper’s Conservative administration agrees to table regular updates on its budget spending commitments.
Among its other provisions for the Arctic region, the government has allocated C$50 million over five years to establish a new economic development agency for the Northwest Territories, Yukon and Nunavut.
That delivered on a promise Harper made last September when he announced the government would set up a standalone agency to promote economic investment in the Arctic region along with a northern satellite office to deal with federal regulations governing major resource projects and improve regulations for northern natural resource projects by simplifying processes and reducing administrative costs.
The government said at the time that “development and regulatory structures in the North are overly complex and often are major barriers to growth.”
Mac regulatory costs No one is better aware of the costs and delays associated with current regulatory process than the Mackenzie Gas project consortium, which has been bogged down in environmental and socio-economic hearings that have delayed the potential startup date for deliveries of Arctic gas by five years to at least 2015.
Baird, on Jan. 26, said the Canadian government is also contemplating changes to legislation that currently requires separate federal and provincial environmental assessments for major resource projects.
Without disclosing the details of what action is planned, he said provincial governments have told him that while “it’s essential to protect the environment, it’s not essential to do two assessments for each and every project.”
The budget also contained plans to upgrade key Arctic research facilities and study the feasibility of a proposed High Arctic research station, both part of Harper’s push to reinforce Canada’s claims to sovereignty over the area.
Targeting the generation of 190,000 jobs for Canada’s population of 33 million, the government has earmarked C$12 billion for major infrastructure projects over the next two years, with the spending conditional on provincial, territorial and municipal governments adding C$9 billion.
An additional C$1 billion will be spent over five years on “green projects” such as sustainable energy, which the government believes will generate C$2.5 billion in new investment over the same period, and another C$1 billion for “clean energy” research development and demonstration projects, including carbon capture and storage.
Issues with MGP help Meanwhile, there has been some unhappiness over the federal government’s offer of financial help for the MGP, although the details of that proposal have yet to be released.
Kevin O’Reilly, a spokesman for Alternatives North, a Yellowknife-based social justice group, told the Canadian Broadcasting Corp. his group interpreted the offer as a “real contrast” to what Environment Minister Jim prentice said a year ago when he rejected the notion of government subsidies or an ownership position in the MGP.
Peggy Holroyd, Arctic program director with the Alberta-based environmental think tank Pembina Institute, said making an offer while MGP is still in the regulatory phase puts the government in a conflict-of-interest position and raises doubts about the federal administration’s ability to make a “fair and objective decision” on the project.
Ian Doig, a leading analyst of frontier energy projects, said the federal offer poses problems for the federally appointed National Energy Board, which is entitled under its mandate to rule that MGP is not an economic undertaking.
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