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Northern premiers crack whip NWT, Nunavut call for time limits to develop Arctic gas; want control of land, resources By Gary Park For Petroleum News
Northwest Territories Premier Joe Handley is turning up the heat on the Canadian government and playing Newfoundland Premier Danny Williams’ “use-it-or-lose-it” card in a bid to get development Canada’s northern natural gas moving forward.
Weary of a quarter-century of unresolved negotiations with Ottawa over jurisdictional control of the NWT’s natural resources, he told the senior government the time has come to “fish or cut bait.”
At the same time, he called for a “sunset clause” that would require construction to start within two years of when the Mackenzie Gas Project partners receive regulatory approval.
Echoing the frustrations expressed over the last year by Williams over his inability to force the hand of partners in the Hebron-Ben Nevis oil project, Handley told reporters at a Calgary symposium on Arctic gas he is concerned that the Mackenzie consortium (Imperial Oil, ConocoPhillips Canada, Shell Canada and ExxonMobil Canada) could, after receiving Mackenzie pipeline certification, divert their money to other worldwide assets.
That would allow them to effectively prevent anybody else from developing northern gas.
He expressed some satisfaction with the National Energy Board’s draft approval conditions that would set a deadline on any certificates issued by the federal regulator for the Mackenzie project, but added he would have “serious concerns about any company that would be issued a certificate and then not proceed with the project or sit on it.”
On the issue of jurisdiction, Handley said the current fiscal arrangements “create neither incentives to promote development nor the fiscal capacity for our territory to reinvest in the economy or facilitate development of our resources.”
Handley calls for NWT resource management He described the current federal control over resource development and the disbursement of taxes and royalties as “not sustainable” and called for a broad devolution and revenue-sharing deal that would put resource management in the hands of the NWT government.
Canada’s 10 provinces own and regulate the development of their natural resources, collecting royalties and taxes, while the Canadian government controls most land and resources within the NWT and is the major source of revenue for the territorial government.
Handley warned that unless the NWT receives greater certainty from Ottawa over the sharing of royalties from northern resource development there is no assurance his government will agree to fiscal terms for the proposed Mackenzie Valley pipeline.
He said there is “significant risk” that public backing for the Mackenzie Gas Project and northern resource development depends heavily on a new fiscal arrangement.
Nunavut backs NWT Handley got solid backing from Nunavut Premier Paul Okalik, who urged the Canadian government to speed up the devolution of resource powers, saying he expects Ottawa to move in that direction in the “near future.”
Okalik said the residents of Nunavut “want responsibilities that will let us stand on our own two feet. It’s time we started getting serious about our future and removing the obstacles that are in the way.”
Like Handley, Okalik agreed energy companies should be pressured to start developing the resource prospects they hold.
He said northern licenses appear on paper to be worth “hundreds of millions of dollars,” but unless there is the real prospect of development occurring they are “worthless.”
If those companies that are merely sitting on their licenses “decide that it’s not economical or practical to move forward, let them sell to someone who’s prepared to act,” Okalik said.
He said orders to drill would “prompt significant market consolidation and turn potential assets into real opportunities.”
Okalik said the current federal regime for managing his territory’s resources has resulted in “more than two decades of paralysis” for Nunavut’s oil and gas.
He said the existing federal policy allows companies to obtain Significant Discovery Licenses, which carry the right to sit indefinitely on prospects.
“We want to see an open market, where companies have the opportunity to make real money with a proved resource,” he said.
Okalik suggested the federal administration of Prime Minister Stephen Harper is either interested in maintaining control over Nunavut’s resources, or doubts the ability of the Inuit government to assume the responsibilities of resource management.
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