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NWT stargazing works; province also pursuing oil, gas strategy
Billions of dollars in oil and natural gas work commitments hang by a thread in the Northwest Territories.
But that hasn’t stopped the region from aiming for the sky - literally.
A trade delegation headed by Premier Bob McLeod and Industry Minister Dave Ramsay has just returned from China and Japan where it promoted the most sustainable natural resource of all.
Faced with what it views as a shaky outlook for oil and gas prices, the government of the NWT is now trying to attract Asian interest in the Northern Lights and an emerging prospect for monitoring polar orbiting satellites from Inuvik.
Ramsay said the tactic is working, with 17,000 visitors a year from Japan flying into Yellowknife - almost matching the NWT capital’s population in the process - to view the Aurora Borealis.
China is next in line, boosting its tourism numbers to 1,500 from 100 four years ago when the Beijing government awarded Canada approved destination status, doubling the number of Chinese visitors to Canada to 500,000 since 2010.
“We have barely scratched the surface when it comes to tourism numbers from China,” he said in an interview with Petroleum News. “We’re also seeing a growing number of visitors from South Korea, Taiwan, Singapore and other Southeast Asian countries.”
This rapid growth has “opened up opportunities for our region,” Ramsay said. “We have seen a number of new tour operators position themselves in Yellowknife, some of them with staff who speak Mandarin and Cantonese.
“It’s important for us to keep telling our story that the NWT is the number one destination for Aurora viewing in the world today. Even though we have competition, it’s important for people to know that Yellowknife is directly under the peak of magnetic activity.”
Just as important is the emergence of Inuvik “as probably the best place on earth to monitor polar satellites,” he said, noting that two countries have already set up shop in the town and another 20 or 30 are weighing the prospects.
But Ramsay conceded that growth hinges on building an optic line down the Mackenzie River Valley to provide broad-band capacity in Inuvik - an investment of C$90 million that is in the planning stages as part of a hoped-for energy and transportation corridor.
Oil, gas high-cost, high-risk Although McLeod and Ramsay had some meetings with petroleum companies they accept the reality that the NWT is a high-cost, high-risk environment for oil and gas exploration and development that will suffer even more if low oil prices persist for another two or three years.
Even so, Ramsey said a “big part” of the trade mission was still to attract investment in mining, oil and gas, especially from Japan, where “there is a lot of money looking for a home.”
He said the NWT is far from “throwing in the towel” on its resource riches, given that it is less than a year since the territorial government finally gained regulatory control over the region’s public land, water and deposits as part of a devolution of powers from the Canadian government.
“It’s a different world today than it was a year ago,” he wryly noted.
Given the years it took to achieve that breakthrough it has been a cruel twist to see the big hopes for industrial growth coincide with the worst slump in commodity prices in more than 30 years, with no end in sight.
The blunt message from the major players occurred in December when Chevron Canada told the National Energy Board it was putting its Arctic drilling program “on hold indefinitely” - shelving plans to spend about C$2 billion exploring in the Beaufort Sea (where it holds one license outright and has a 60 percent stake in the other in a partnership with Norway’s Statoil) and C$635 million on an onshore shale play.
Another setback involves Husky Energy’s exploration of its highly touted Canol shale prospects while it conducts a further evaluation on how and when to move forward, although the Arctic was not included in Husky’s list of immediate opportunities when it released a long term plan for 2020 and beyond. ConocoPhillips is moving in the same direction.
Based on a pre-Christmas meeting in Calgary, Ramsay clings to hope that Imperial - operator of the Mackenzie Gas Project and a joint venture with ExxonMobil and BP that plans to drill the deepwater Beaufort - will eventually put together a commercial development.
Ramsay said there is no company better positioned than Imperial to see the benefit of gas from the three Mackenzie Delta anchor fields, that have proven reserves of 6.2 trillion cubic feet, as feedstock for LNG exports out of British Columbia or delivery to some other market, plus preliminary estimates of 16.4 trillion cubic feet of marketable gas in the Beaufort Sea and High Arctic Islands.
“We’re not ready to give up on the Mackenzie project,” he said, noting that a meeting he and McLeod held with Japan Petroleum Exploration Co. demonstrated that interest in using Mackenzie gas for LNG remains alive.
He noted that JAPEX holds a US$4 billion stake in the Pacific NorthWest LNG project operated by Malaysia’s Petronas.
Arctic Gateway In addition, the NWT is trying to gain support from the Canadian government for the Arctic Gateway concept that would connect the Alberta oil sands with a tanker port at Tuktoyaktuk on the Beaufort Sea.
Ramsay said those discussions also involve the option of building a pipeline down the Mackenzie Valley, then taking the Dempster Lateral route across the Yukon into Alaska, ending up at Valdez.
“Whatever we can do to work with our great friends in Alaska would be good for our region,” he said.
For the NWT, the immediate objective is to prepare a business case based on the economics of various options that will form a stand-alone oil and gas strategy, Ramsay said, adding that his government intends to have a plan completed before an NWT election this fall.
He said the plunge in oil prices provides an opportunity to work on the strategy and “chart a course for the industry in the NWT.”
- Gary Park
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