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To market, to market ... Hiatus in Canada’s Arctic onshore, offshore exploration creates time for provinces, territories to fast-track pipeline approvals GARY PARK For Petroleum News
Sitting on a treasure trove of onshore oil riches estimated at up to 300 billion barrels, Canada’s Northwest Territories is certain the time will come when those resources are developed, said Industry Minister Dave Ramsay.
Add to the oil a minimum 6 trillion cubic feet of natural gas in the Mackenzie Delta that underpins the stonewalled Mackenzie Gas Project and the chief salesman for the NWT has reason for optimism as he travels North America promoting the region’s energy potential and seeking out corporate candidates to tap it.
But Ramsay also concedes the NWT has “lots in common with other jurisdictions - we, too, are looking for ways to get our resources to market.”
His latest chance to look for allies came at the annual summit of the Pacific NorthWest Economic Region - comprising five states, including Alaska, three Canadian provinces and two territories - of which he is the current president.
“That, and working with others to ensure it happens, has been an obvious theme (at the conference),” he told Petroleum News from the conference at Big Sky, Montana.
In addition to conference sessions, he held sideline discussions with the Alaska caucus and with pipeline companies.
‘Corridor concept’ The ace in the NWT hand remains what it calls the “corridor concept” - building a pipeline down the Mackenzie River Valley to the Beaufort Sea or possibly across the Yukon and Alaska to connect with the trans-Alaska oil pipeline.
Whatever market-directed options surface, Ramsay is adamant that the NWT will not merely be an overland conduit for shipping bitumen from the Alberta oil sands.
He said any pipeline must be tied to the development of the NWT’s own reserves, noting that aboriginal communities in the NWT will only support a pipeline project if they derive benefits from resources on their lands.
Ramsay concedes “we have to take the long game approach (to developing both onshore and offshore resources). But we will get there eventually.”
Plan to fast track pipelines While PNWER was engaged in its deliberations there was an unexpected development in Canada, when the premiers of Canada’s 10 provinces and three territories rolled out a draft plan to fast track new oil pipelines as part of a Canadian Energy Strategy.
At their annual meeting in St. John’s, Newfoundland, they were presented with a sweeping vision to develop oil, natural gas and electricity across Canada, with the emphasis where Ramsay wants to see it - making a commitment to build more transmission systems by eliminating obstacles to regulatory approvals.
The draft strategy calls for the premiers to “develop and enhance ... transportation networks,” including oil and gas pipelines and electricity grids for both domestic and export markets.
“As energy production expands to meet growing domestic and international energy demands, our country must have the necessary pipelines, electricity systems and other energy infrastructure in place to move energy products to the people that need them,” the document said.
That puts the pressure on provincial and territorial governments to “improve the timeliness and certainty of each jurisdiction’s regulatory approval decision-making processes for energy developments,” partly by eliminating “duplication and inefficiencies” that have stalled progress on several projects, mostly pipelines out of the Alberta oil sands.
Environmental, First Nations concerns But the strategy makes only passing reference to environmental concerns that, along with accommodating the demands of First Nations, have held up all of the major pipeline projects.
Without suggesting any binding commitments, the draft plan makes a general pledge to “transition to a lower carbon economy” through measures such as carbon capture and carbon pricing.
However, the draft calls for the governments to “actively pursue absolute (greenhouse gas) emission reductions based on sound science (and) collaborate on the development of an integrated pan-Canadian and North American approach to GHG reductions.”
The challenge posed by climate change is reflected in efforts so far by the three largest provinces, Ontario, Quebec and British Columbia, which have made some headway in lowering overall emissions, while Saskatchewan’s output has climbed 66 percent since 1990 and Alberta’s has risen 53 percent.
Even Alberta’s freshly elected New Democratic Party government of Premier Rachel Notley has given no indication it is prepared to set absolute GHG reductions, committing itself only to make the current intensity-based targets tougher.
But Notley has promised to release an updated version of the province’s environmental policy later this year.
‘Pause in activity’ While the Canadian governments grapple with making a breakthrough on a national energy strategy, an idea that was first advanced in 2012 by former Alberta premier Alison Redford, Ramsay is also coming to terms with what he describes as a “pause in activity by some folks” in the NWT.
For now, all of the major exploration initiatives are on hold - C$635 million in work commitments by Husky Energy and ConocoPhillips Canada in the Central Mackenzie Valley; C$1.18 billion by BP and C$585 million by Imperial Oil and ExxonMobil who have formed a joint venture in the Beaufort Sea; and C$103 million by Chevron Canada in the Beaufort.
Those decisions are “straight up economics,” Ramsay said.
“Hopefully before oil prices rebound, we (the NWT) will have an oil and gas strategy that we’re in the midst of preparing and that should be out this summer,” he said. “We’re not waiting to see what happens or waiting for oil prices to come back. We want a game plan for developing our resources in a meaningful and sustainable fashion.
“These things are cyclical and our hope is that we will be back in the Central Mackenzie Valley sooner rather than later,” while the NWT government believes the Beaufort hopes will also be revived, Ramsay said.
The lull gives the NWT time to “put key investments in place” for all-season roads from Inuvik and Tuktoyaktuk and along the Mackenzie River Valley, he said.
As well, the timeout gives regulators and the industry a chance to reach an agreement on rules for handling any oil spills in the Beaufort and for companies - with Norway’s Statoil rated as a contender - a chance to explore partnerships, Ramsay said.
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