Minister Ramsay’s speaking notes: Inuvik Petroleum Show

Jun 19 2012

(check against delivery)

Good morning, ladies and gentlemen.  It is a pleasure to be here today at the Inuvik Petroleum Show.  I want to echo Premier McLeod’s comments on the fantastic job that Mayor Rodgers, Council members and the staff of the Town of Inuvik have done putting on this event. Thank you for extending to us, once again, that warm Inuvik hospitality we have come to expect at this important event.

It is a great pleasure to be attending this event for the first time as Minister of Industry, Tourism and Investment with the Government of the Northwest Territories.  It is a great opportunity for all of us to catch up with people from across the territory and in the industry.

I want to take some time today to speak about the work our Government has been undertaking in relation to oil and gas exploration in the NWT.   The Inuvik Petroleum Show is the ideal venue for us to talk openly about the challenges we face in the development of our significant resources, as well as the progress we have made over the past few years. 

I think it’s safe to say that everyone in this room is excited about the opportunities on the horizon in the NWT. Today I want to provide our government’s view on three distinct but important areas of petroleum potential in the NWT. I’m referring to exploration activity in the Sahtu Region, our offshore potential, and the status of the Mackenzie Gas Project.

Over the next few days, I look forward to hearing from others who will provide their perspectives on these three developments as well.

Before I begin, I want to provide an update, as Minister of Transportation,  on another important and related project – the Inuvik to Tuktoyaktuk Highway.  As you know, our government remains fully committed to this important development, which will connect Canada from coast to coast to coast.

A further indication of that commitment is the recent $2.5 million that the Department of Transportation has budgeted to do additional planning for the highway, including the identification of quality gravel sources to build a road of this length.

This project is yet another example of our government’s focus on developing a territory with a strong, diversified economy that provides opportunities and choices to ALL our residents.  Socially responsible and environmentally sustainable development of our resources is one of the keys to achieving that goal.

This past year we have seen a number of exciting advances in exploration and development in the NWT.  The Sahtu Region is a prime example of the potential that exists in the petroleum industry.  A 2011 Call for Bids generated $534 million in work expenditure bids for 11 parcels of land in this region.  Industry experts believe there is potentially as much as two billion barrels of oil in this area – just sitting there waiting to be tapped.

Work on these parcels began this past winter and we saw unprecedented levels of activity in the Sahtu, and subsequent benefits for the region.  Major players in the international oil industry – including ConocoPhillips, Husky Oil Operations Limited, and Explor Geophysical – who are all participating in this year’s Petroleum Show, have signed access and benefit agreements with various local land corporations.

These agreements result in jobs and business opportunities for residents, and provide significant direct and indirect investment in the local community. There are many examples of how increased exploration has translated to benefits in one of our communities, and I would like to share a few concrete examples.

As a result of increased petroleum activity, the four hotels in Norman Wells were at full capacity for the past six months; vehicle rentals and sales at local grocery stores increased by an amazing 100 percent; and aircraft take-offs and landings in the community tripled. Just think of the jobs and new business opportunities for residents and businesses from this continued exploration!

The GNWT is taking action to support residents of the Sahtu so they can make the most of the economic opportunities this activity creates.  Our government has been working hard with the National Energy Board, the Northwest Territories Geoscience Office, and Aboriginal Affairs and Northern Development Canada in supporting local initiatives, such as assisting land corporations to understand hydraulic fracturing.

This will help to ensure that communities have the right information to make decisions about development.

In addition, the Tulita and K’asho Got’ine Districts are preparing to offer their private lands for sale. The regional office of Industry, Tourism and Investment is working with their officials in their efforts to obtain a rights issuance for this.

As I noted earlier, the exploration, development and production of oil on settlement lands would result in many employment and business opportunities for our residents and communities.  It is important to note that royalties from production on their private lands would go directly to these beneficiary organizations, and this will create even more opportunities for the community. We know the Sahtu Region holds great promise for resource development.

Our challenge as a government and for the region itself, is to ensure that resources are developed in a manner that brings economic benefits to our residents while ensuring the protection of our environment.

As you know, Premier McLeod and our government continue to pursue the authority to regulate development in the Northwest Territories through the devolution of lands and resources.

Once in place, Northerners will finally be able to make the decisions on how we develop our resources and protect our environment.  Acquiring this authority, and the resource royalties that we would start collecting, will be our best opportunity to ensure our residents benefit from development in the Northwest Territories. At the same time, the Government of the Northwest Territories continues to work with existing regulators to ensure Northern interests are understood and respected.

Our government understands the importance of energy and wants to see our resources developed in a responsible and sustainable manner. We do not support development at any cost to residents, the environment or the public.

With this principle in mind, we were very satisfied with the Arctic Offshore Drilling Review that the National Energy Board conducted this past year, to learn how best to regulate our offshore activity. The GNWT was a full participant in this review and we are pleased with the extensive engagement with Northerners that took place during this process.  An important outcome of this review was the insight gained on the challenges of Arctic exploration and development.

This insight will help the National Energy Board ensure the correct safety and environment protection requirements are in place when considering future applications by companies who want to drill in the Arctic offshore.  As Minister, I am looking forward to the update from the National Energy Board tomorrow morning to hear further on this.

In this region, it is important that you understand that our government, and my department particularly, is focusing more and more on our robust offshore energy reserves.  This is the area that I would like to turn to now.

Beneath the waters of the Beaufort Sea, the Northwest Territories has – within its territorial waters – resources which extend to the North Pole. This area has enormous potential to supply both natural gas and oil to North America.

What kind of potential? Well, the United States Geological Survey estimates that the area north of the Arctic Circle has an estimated 90 billion barrels of undiscovered recoverable oil; 1,670 trillion cubic feet of recoverable natural gas; and 44 billion barrels of recoverable natural gas liquids in 25 geologically defined areas, thought to have potential for petroleum.

When you consider the robust oil and gas exploration in the Sahtu Region and offshore, it is obvious that there is an increased demand for additional efforts in these areas to help prepare NWT residents for the opportunities and challenges these developments will bring.  To respond to this increased demand, I am pleased to announce an enhanced focus and new name for our Mackenzie Valley Pipeline Office.

Going forward, this office will be known as the Mackenzie Valley Petroleum Planning Office.  This is an opportune time to broaden the mandate of the office, allowing our government to contribute staff and resources to address other areas of resource development in the NWT.

This new name and broadened focus will more appropriately reflect the recent direction that industry has taken. It will also help us respond better to the new challenges this will place on our people and our communities.  As importantly, these actions will allow us to continue our required efforts on the Mackenzie Gas Project and maintain the capacity to deal with future challenges and opportunities this Project will bring when that activity increases.

In addition to the potential in the Sahtu and offshore, our government remains very interested in the long-term goal of working with industry and the federal government to harness oil and gas resources, and develop the Mackenzie Gas Project.  While much has been said about this Project, the Government of the Northwest Territories’ support for this project has not wavered.

Some may say the Project has entered a period of uncertainty. It is true that natural gas prices have gone down, but they will go up again as the demand for natural gas continues to rise.  While it is also true that the project proponents and the federal government have not yet agreed to a fiscal framework for the project, these discussions are ongoing and we remain confident an agreement will be reached. We continue to urge the federal government and the proponents to work together to ensure this important project moves forward.

We are extremely encouraged with the MGP’s most unique element – the fact that an Aboriginally-owned corporation is a one-third equity partner in the project. This partnership has the potential to provide significant social and economic benefits for Aboriginal peoples along the pipeline route.

Since its creation, the Aboriginal Pipeline Group (APG) – whose Chair, Fred Carmichael, will be addressing you during a panel discussion later today — has strived to maximize the Aboriginal ownership interest in the proposed Mackenzie Valley pipeline, for the benefit of its shareholders. In time, we believe the APG will play a major, long-term role in enabling a higher level of economic independence and self-reliance for the people and communities of the Mackenzie Valley.

Our government believes the Mackenzie Gas Project is a nation-building venture that, when built, could play a key role in pulling Canada out of its economic slump. The numbers speak for themselves:

  • Construction and operations of the project will require over 208,000 person years of employment.
  • Estimates indicate that the Mackenzie Gas Project could contribute $68 billion to the Northwest Territories economy and over $86 billion to the Canadian economy.

As I stated earlier, sustainable resource development is a priority for our government and we fully recognize the need to minimize the impact of climate change in Canada’s North. Delivery of natural gas to the North American market will mean displacement of dirtier coal-powered electricity generation.

Natural gas will be the transition fuel to a lower-carbon economy. It is also a fuel we would use in the North. We have done a number of studies for the conversion of communities to natural gas from a Mackenzie Valley pipeline, displacing imported oil. Natural gas is cleaner, cheaper and local – key attributes of a sustainable energy system.

The residents of Inuvik and Norman Wells are acutely aware of the need for new secure and economic sources of natural gas. This is one of many benefits of the Mackenzie Gas Project to our territory.

Finally, I would like to take a few minutes to speak about the need for infrastructure in the NWT. With respect to resource exploration, one of the key challenges for our territory is the lack of infrastructure. The renewed interest in oil and gas exploration and development strengthens the need to develop our transportation infrastructure.

We often hear this is the age of investment in Canada’s North, and maintaining “Arctic sovereignty” is often cited as a key priority of the federal government. One of the best ways to maintain Canada’s sovereignty in the North is to have people living there in self-reliant and sustainable communities.

Permanent highways will bring down the cost of living in some NWT communities and help develop the NWT’s oil and gas industry. They would also contribute to long-term employment and business opportunities resulting from the road construction and ongoing maintenance.

The construction of the all-weather highway between Inuvik and Tuktoyaktuk is a project the federal government describes as having “national significance”.

I spoke at the start about our commitment for a further $2.5 million in funding for this project.  I am pleased to note the 17th Legislative Assembly included the Inuvik to Tuktoyaktuk Highway segment of the Mackenzie Valley Highway as a priority that will help to strengthen and diversify the NWT economy.

Advancement of major projects in the NWT such as the Inuvik to Tuktoyaktuk Highway, the remaining sections of the Mackenzie Valley Highway and the Mackenzie Gas Project can provide much-needed economic stimulus to all Canadian jurisdictions.

A great deal of planning work is required before construction can start on the Inuvik to Tuk portion of the highway. Department of Transportation officials are engaged in the ongoing environmental review for this project and an assessment of procurement options.

As part of this, we have spoken with local contractors to gather information about their interests and capacity to complete the project.  Officials have also initiated discussions with Canada toward a draft funding agreement for the $150 million committed in the June 2011 federal budget.   Discussions to secure land tenure for the highway right-of-way have also begun.

There is no denying our territory will face challenges when it comes to resource development, but I prefer to focus on the promise and opportunity the NWT holds. There is a wealth of resources and investment opportunities it will bring – not only for our businesses and our economy – but also for our communities and our territory as a whole.

We need the assistance of the federal government to help us create sustainable development options for our residents. Targeted infrastructure spending and reaching a fiscal framework with proponents of the Mackenzie Gas Project are key to helping us realize our full potential.

The Government of the Northwest Territories understands that resource development will play a pivotal role in the future of our territory, and we hope that Canada will help us achieve our vision for sustainable Northern communities.

We are also committed to working cooperatively to foster even greater partnerships between our governments, business, and industry to ensure we make the most of our petroleum potential – a commitment that will ensure our residents continue to see a long-term, viable future for themselves in Canada’s North.

Thank you for your time today, and I hope you enjoy the rest of the Inuvik Petroleum Show.