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Tying the knot Canada wants bilateral commission for Alaska, Beaufort Sea, High Arctic Gary Park Petroleum News Calgary Correspondent
The Canadian government is pressing for a bilateral commission with the United States to pursue resource development in Alaska, the Beaufort Sea and High Arctic.
Indian Affairs and Northern Development Minister Robert Nault, in a speech to the Canadian Energy Research Institute May 22, stepped up his case for cross-border co-operation rather than confrontation in the North, starting with gas pipelines from the North Slope and Mackenzie Delta.
He said the two countries “need to reduce wherever possible the potential for short-sighted political decisions that will have negative impacts on the long-term development of the continent’s northern reaches.”
Nault suggested that a bilateral commission would help ensure that northern resources “get developed as efficiently as possible and in as environmentally-respectful manner as possible ...” Presentation going to Canadian cabinet Based on indications of support for the idea earlier this month from members of the U.S. Congress, Nault said he plans to make a proposal to the Canadian cabinet.
He had previously recommended that the United States and Canada appoint commissioners to explore ways to facilitate pipeline approvals.
“I very much believe that co-operation (between the two governments) is necessary in order to see the (Alaska Highway) pipeline built,” Nault said May 1 in a teleconference from Washington, D.C. after meeting with U.S. industry and government leaders.
Nault said a joint approach would help speed up the Alaska pipeline and bolster North American energy security.
“If we’re going to build an Alaska line, we need to get down to work,” he said.
In May, U.S. Ambassador to Canada, Paul Cellucci, gave added momentum to the concept of a joint regulatory approach, calling for a climate that encourages investment in the development and transmission of energy resources. Nault remains opposed to “subsidies” But Nault remains uneasy at the prospect of U.S. legislation giving North Slope producers a federal tax credit of up to 52 cents per thousand cubic feet of gas shipped if the wellhead price dropped below $1.35 per thousand cubic feet.
Under a proposal being debated by U.S. legislators, if pipeline tariffs came out at the predicted level of about $2.38 per thousand cubic feet, the credit would take effect when the wholesale market price reached about $3.73.
Traditional incentives, such as loan guarantees or accelerated depreciation of capital are fine, guaranteed floor prices are not, Nault said, noting the distinction between measures that apply to infrastructure and those that relate to the commodity.
In fact, he said, the Canadian government would not only endorse loan guarantees for Alaska, it might offer guarantees to the Aboriginal Pipeline Group which is seeking financial help from TransCanada to gain a one-third stake in a Mackenzie Valley pipeline.
However, he emphasized that subsidies -- such as a floor price-- would be a “serious impediment to moving forward,” because of the potential distortion of the marketplace.
“We feel strongly that any decisions on the timing, the route and the economics of Alaska gas development should be left tom the market,” he said. Little doubt Mackenzie first Nault said there is now little doubt that the Mackenzie Valley line will be built first, but that North American hunger for gas will ensure two lines are needed.
“It’s time for us to move the discussions about an Alaska pipeline to a higher level,” he told the Financial Post. “Allocation of capital of that magnitude ($20 billion) needs certainty and I think that’s the issue that is lacking on the Alaska line right now.”
Meanwhile, he said the Canadian government is giving priority to establishing a smooth regulatory regime for the Mackenzie Valley project, while working with the Northwest Territories government to ensure northerners are properly trained to benefit from pipeline construction and related exploration and development activities.
Nault said the Canadian and NWT governments are also identifying the infrastructure funding that is needed to promote resource development.
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