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February 2014

Vol. 19, No. 6 Week of February 09, 2014

NWT after Asian partners, taking ‘proactive approach’ to investors

April 1 will be no joke in the Northwest Territories. Just a time for jovial celebration.

That’s the day 41,000 residents of an area sprawling over 520,000 square miles will achieve their long-sought goal of replacing the Canadian government and gaining management control of a treasure trove of oil and natural gas riches, along with minerals and diamonds.

And the NWT is eagerly displaying some fancy footwork as it seeks to find tango partners in China, India, Japan and South Korea.

As Industry, Tourism and Investment Minister David Ramsay likes to tell audiences, the NWT holds 35 percent of Canada’s known natural gas resources and 30 percent of its oil.

Having finally secured a devolution agreement with the federal government, the NWT — assuming the final pieces are in place — will be able to set the pace and direction for 80 percent of its onshore, compared with 1 percent today. The remaining 20 percent is largely committed to national parks.

Ramsay and Premier Bob McLeod have just returned from a trade mission to China, where they continued a process of selling the NWT to prospective investors and sizing up possible markets.

They also pitched the region’s fur trade and its spectacular Aurora displays which are now attracting several hundred Chinese visitors a year.

Raising money difficult

With capital markets so tight these days, upstream operators are finding it hard to raise money, Ramsay said in an interview with Petroleum News.

“The interest is there from companies, state-owned enterprises and the Chinese government who want a big part of our oil and gas,” he said.

“But we heard over and over again that we will have to travel to China a number of times to build rapport and trust. Nobody else is going to do that for us.

“So we will be ready on April 1 to take a more proactive approach to selling our opportunities,” Ramsay said. “That’s when we will have a new-found authority and ability to get out and sell our potential.”

Although he suggested the NWT may have to increase its complement of trade officers — currently a one-person show — he also argued that smaller can be better for the NWT.

“We are able to maneuver, we are not big and cumbersome and we can provide access to top politicians and policy-makers. And we know where we want to go. We can chart a course with investors and work together.”

For now, he hesitated to say what benefits might arise from the Chinese mission and future trips to India, South Korea and Japan.

Goal: Global energy powerhouse

But Ramsay was emphatic that the NWT is determined to become a global energy powerhouse over the next 10 to 20 years.

McLeod said his government is hopeful that if Canada starts exporting LNG to Asia that could revive plans for the Mackenzie Gas Project to develop 6.2 trillion cubic feet of established gas reserves in the Mackenzie Delta.

“I’m more convinced than ever the Chinese are going to need our gas,” he said.

Imperial Oil, operator of the MGP, and its parent company ExxonMobil are already assessing whether MGP gas could be a supply source for their West Coast Canada LNG joint venture that has National Energy Board approval to export up to 30 million metric tons per year.

Although Imperial said in December that the MGP cost estimate has climbed 40 percent since 2007 to C$20 billion, Ramsay said he is confident the gas “will find a market at some point for that gas.”

He said the NWT is also on the verge of increasing its borrowing limits to C$1.8 billion from C$800 million to build infrastructure such as roads, airports and possibly a deepwater port at Tuktoyaktuk on the Arctic Ocean, following up on a tanker shipment to Asia in 1993 of crude from ConocoPhillips’ Amauligak discovery estimated at 235 million barrels of oil and 1.3 TCF of gas.

He said dredging for a harbor would depend on how fast Imperial, ExxonMobil, BP and Chevron proceed with drilling work commitments of C$2 billion in the Beaufort Sea.

—Gary Park






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