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February 2016

Vol. 21, No. 6 Week of February 07, 2016

NWT in the dumps

Weak prices force companies to bail out of region; NWT premier doubts anything will happen in upstream ‘for 10 years, at least’

GARY PARK

For Petroleum News

The one constant in Canada’s North has always been an upbeat mood in the face of adversity.

But even that bulwark is crumbling in the oil and gas sector of the Northwest Territories.

In the bleakest and bluntest of terms NWT Premier Bob McLeod told Petroleum News that “nothing will happen in the industry for 10 years, at least.”

That translates into no revival of the Mackenzie Gas Project and no advance in renewed exploration of the Beaufort Sea, Mackenzie Delta or Central Mackenzie Valley and no thought of a pipeline carrying oil sands bitumen from Alberta down the Mackenzie River to a tanker port on the Arctic Ocean or across Yukon to Valdez.

“All the oil and gas exploration companies have packed up and left the Northwest Territories,” he said.

“The companies that bid more than C$2 billion (for rights to explore the Beaufort Sea) have all shelved their projects. There is nothing on that horizon.”

Those players were led by an Imperial Oil-BP partnership and Chevron Canada and had previously said they needed more time to conduct technical work and complete the regulatory process before deciding to invest in exploration.

Imperial-BP have applied to extend their exploration permits to 2028 from 2019-20.

“There’s not much optimism that anything will happen” in the next decade, McLeod said.

“So I think it will be difficult to get political support for anything significant.”

Energy corridor work continues

The one pocket of activity will be continued work on an energy corridor along the Mackenzie Valley, while the NWT government will remain involved with other territories and Canada’s 10 provinces in the development of a national energy strategy.

It has been two years since the Canadian government transferred control over the NWT’s land, water and resources, with the pledge to review by 2019 which government should have charge of environmental assessments.

McLeod said the new government of Prime Minister Justin Trudeau has indicated that one of its first items of business will be to re-examine that deadline and “hopefully give us responsibility for the environment sooner rather than waiting five years.”

Among Trudeau’s priorities is discussion on “additional means to support economic development, including through investment in infrastructure.”

Otherwise, McLeod said the resource industries including mining view the NWT as “not a very good place to invest because of inefficiencies, the regulatory process and the sectors of our population that are not welcoming.”

Unsettled claims

“We also have difficulties with land access because we still have large portions of the NWT that have unsettled land claims,” McLeod said.

He said the government’s current priority is to “at least maintain the mining industry, which is the largest sector of our economy,” even though commodity prices have driven exploration “way down. We have to maintain what we have and also help the industry get through a difficult period.”

The rapid decline in northern fortunes, accompanied by dashed hope of a breakthrough in the Central Mackenzie Valley, is a harsh setback for McLeod, a month after he was elected to an unprecedented second consecutive term as premier at the same time he reclaimed the industry portfolio.

He said the newly elected legislature will be one of “change and better government. A clear message that I heard from voters (in the fall election campaign) is that they want to see positive change in territorial politics. They want a government that is more transparent and open to input from the public on priorities and decisions.”






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