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Vol. 17, No. 36 Week of September 02, 2012
Providing coverage of Alaska and northern Canada's oil and gas industry

NWT eyes new energy role

Premier believes territory on track for April agreement with Canadian government

By Gary Park

For Petroleum News

Northwest Territories Premier Bob McLeod is confident his region is within sight of taking greater control over the exploitation of its natural resources and collecting a direct share of royalties and taxes, all of which could open the door to serious development of Canada’s North.

Following a meeting with Canadian Prime Minister Stephen Harper on Aug. 22 he boldly forecast that the NWT will have a “devolution agreement” in place by April 2014, concluding many years of hopes raised and hopes dashed.

The deal would give the NWT the right to set its own pace for oil, natural gas and mineral development and no longer rely on the Canadian government to return a portion of the revenues it collects from the extraction and sale of those commodities.

McLeod told Petroleum News that he and Harper “agreed to keep working together to make sure we meet some deadlines and make sure an agreement comes into effect in April 2014.”

He said the initial phase of devolution would apply only to the onshore, but once a pact is in place “we’ll negotiate the offshore.”

An offshore deal would be consistent with pacts the federal government has in place to cover the offshore of Newfoundland and Nova Scotia, McLeod said.

He also said he took the opportunity to drive home a message to Harper that opening up Canada’s Arctic would be a vital element of a national energy strategy.

Currently, Canada’s 10 provinces own their resources and determine how they are developed.

“Every province and territory should be able to develop and market natural resources without being held up in a regulatory logjam,” McLeod said.

“The ultimate irony is that we (the NWT) have all this oil and gas and we still have to import fuel to heat our homes.”

Gas could go to Asia

McLeod said he tried to impress on Harper that Canada’s has the natural gas resources to make the transition from coal-fired power plants as well as providing fuel for the transportation sector.

On the long-stalled Mackenzie Gas Project, he said Harper still believes there will be a “commercial decision by the proponents based on the economics of a pipeline.”

McLeod also did not rule out the possibility of using Arctic gas for LNG exports to Asia rather than attempting to sell the gas into saturated southern Canadian and United States markets.

“My position has always been that if all the doors are closed and we can’t deliver our gas south, east or west and the Mackenzie Gas Project doesn’t go ahead because too much shale gas and commodity prices that are too low, we have to look at keeping all of our options open,” he said.

30 projects in next decade

Making his seventh annual summer trip to Canada’s North, Harper forecast that, backed by his own government’s new legislation to streamline regulatory approvals, 30 oil, natural gas and mining projects could be developed in the region over the next decade.

But he sidestepped providing a detailed breakdown beyond suggesting oil and gas development could increase exponentially in coming years.

Harper’s office estimated the new investment could reach C$38 billion and increase employment in the resource sectors to 8,000 from the current 5,000.

“Those who want to see the future of this country should look north,” Harper told an audience in the Yukon.

He said the “great national dream (of opening up the Arctic to economic development) no longer sleeps. It is not down the road. It is happening now. The North’s time has come.”

He said the global appetite for resources is ready-made for Canada and his government’s objective is to ensure “that northerners receive every possible benefit from northern development.”

Harper said the economic benefits of Arctic development would help Canada fend off global economic challenges and “continue to outperform Europe, the United States and Japan and not fall into the long-term difficulties those economies are facing.”

As part of the trip, Aboriginal Affairs and Northern Development Minister John Duncan signed an agreement Aug. 22 with Yukon Premier Darrell Pasloski to provide the territory with a greater portion of revenues from the resource and mining industries.

Harper said in a news release that in addition to introducing a “one project, one review” environmental assessment for major projects and setting fixed deadlines of up to 18 months on regulatory decisions, his government is taking other steps to spur development, including geographic mapping to help locate energy and mineral deposits.

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