NOVEMBER 18, 2002
HON. ROGER ALLEN
It is a pleasure to be here today on behalf of our Premier Stephen Kakfwi. Stephen sends his regrets that he could not personally update you on the development of the natural gas resources in the Northwest Territories.
In Canada, the success of development projects cannot be achieved without the meaningful partnership of local residents, governments, and industry.
This is especially true in the Northwest Territories where we are on the brink of witnessing one of the largest development projects in Canadian history: The Mackenzie Valley pipeline. We are ready to take the next step in the development of these resources. But we cannot achieve success by ourselves. We need the Government of Canada and industry to partner with us to ensure that this development is a success. We need clear and decisive leadership from the Government of Canada to help us move ahead with this project.
Our government realizes how important natural gas development is to the people of the Northwest Territories. With it, we believe the Northwest Territories can become a vibrant and prosperous territory. We believe the Northwest Territories can become a new economic engine for Canada
During the past three years, we have taken this message to our communities, corporate boardrooms in Canada and the United States, to other provinces in Canada, to Senators and Congressmen in Washington and to the Government of Canada.
The development of the Northwest Territories natural gas resources and the pipeline to transport this product to market is a massive undertaking that will transform our economy.
However, in order for us to support this project, and in order for it to succeed, we must ensure that the people of the Northwest Territories will realize the benefits of such development.
Meanwhile, our communities need to prepare for development so that they are able to capture these benefits. The Government of the Northwest Territories has already instituted countless training and entrepreneurial programs and is encouraging the development of joint venture companies between northern communities and established southern businesses. All these efforts will promote the development of meaningful benefits for our residents.
Most notably, the Aboriginal Pipeline Group is planning to invest in a Mackenzie Valley Pipeline. We strongly support their vision and their work with the Mackenzie Valley Producers Group to cooperatively develop the pipeline as a joint venture. Equity ownership is a major component of benefits. It allows benefits to accrue to Aboriginal people long after the pipeline is built.
Natural gas development must improve the quality of life for residents throughout the Northwest Territories. This development will be the foundation on which we will build a strong, vibrant and prosperous economy for future generations.
But our natural gas industry must also remain sustainable. The Mackenzie Valley pipeline must be built with sufficient excess capacity to accommodate new natural gas discoveries. This will ensure continued exploration and development based on timely access to markets.
There is no benefit in developing anchor fields if the pipeline does not have enough capacity to carry production to market. This is not just a pipeline for selected pools of gas. It is a pipeline to a new basin with incredible potential. We do not want to see this potential restricted by lack of available capacity to market.
We were pleased to hear late last week that Esso is considering expanding the capacity of its proposed natural gas pipeline from the Delta from 800 million cubic feet per day to 1.9 billion cubic feet/day. We look forward to hearing from Esso the planned size for the initial pipe.
In the short term, the Northwest Territories needs to develop its infrastructure. We are a very large territory with a very small population base. It is very difficult for our government to develop the needed infrastructure given our constrained budget and other more pressing needs such as health and social services. Within the next year we will have two producing diamond mines and increased gas exploration and development activity.
Truck traffic supplying these developments is deteriorating the condition of our roads. Many of you are probably thinking this level of development brings significant tax and royalty dollars. And you are right. Unfortunately, 95 percent of these revenues will accrue to the Government of Canada and not the Government of the Northwest Territories.
Currently the Government of the Northwest Territories is responsible for the infrastructure development. However, we do not receive an adequate proportion of the revenues to keep up with the industry’s demands for safe and well-maintained infrastructure. The Government of Canada must help us find the money needed for infrastructure investment. This investment is urgently needed for the sake of continued economic success in our territory and to the benefit of southern Canada.
The people of the Northwest Territories believe should be receiving a fair and equitable share of resource revenues flowing from the development of our natural resources. This is not happening.
Resource development taxes collected by our government are only about five percent of what the Government of Canada collects in royalties and taxes. This inequitable situation must end. The formula for sharing revenues must ensure that the Government of the Northwest Territories remains financially strong and stable.
Achieving control and administration of the non-renewable resources of the Northwest Territories will give us a greater control over how development proceeds. We are in the process of negotiating the devolution of these responsibilities now. Our proposal for resource revenue sharing is unique. We propose that revenues be shared amongst the Government of the Northwest Territories, Aboriginal governments, and the Government of Canada. No other territory or province has ever proposed or done this.
There have been extensive debates regarding northern gas development during the past few years. Our Government has advocated the principle of supporting market-based decisions on the development of northern gas. Unfortunately, it is not a principle other governments have been inclined to follow.
We viewed the proposed floor price subsidy for American North Shore gas in the US Energy Bill as an affront to efficient private sector decision-making and contrary to the free market ideals the United States purports to be a fundamental right.
The Government of the Northwest Territories was the first to oppose this subsidy and route mandate. We have gained many allies and we are grateful for their support.
The list of opposition to these legislative measures includes the Government of Canada, the United States Administration and numerous gas producers in both countries. An editorial in the Wall Street Journal called the route mandate and floor price subsidy worthy of a President Bush veto of the entire Energy Bill.
We now know that that will not be necessary. We applaud the decision by the United States Congress to drop its draft energy bill.
The draft bill was deeply flawed by the provision of a floor price subsidy for Alaskan North Slope gas. It deserved to be dropped from consideration.
The Government of the Northwest Territories does not oppose the use of more traditional incentives such as accelerated depreciation allowances, loan guarantees and profit sensitive royalty regimes but we will continue our opposition to a price subsidy if Congress chooses to revisit this subject in the New Year.
Meanwhile, progress continues to be made on a Natural Gas Pipeline to transport Mackenzie Delta gas to market.
The Mackenzie Delta Producers Group and the Mackenzie Valley Aboriginal Pipeline Corporation have completed a great deal of work to date.
The regulatory boards and agencies that will review the project application have completed the regulatory cooperation plan. This agreement outlines how these boards will work together in carrying out the full and complete review process.
The progress made on planning for a Mackenzie Valley pipeline validates our principle of supporting market-based decisions.
Support for resource development in the Northwest Territories is at an all time high, but will wane if the issues important to our residents are not addressed soon. Aboriginal leaders are united in their support of development including a pipeline along the Mackenzie Valley. We see the opportunities that this development presents to all residents of the Northwest Territories. Done right, this project could be monumental in improving life in our communities and bringing prosperity and dignity to all.
The success of natural gas development will be measured in terms of the success of both industry and the Northwest Territories. We must work together to ensure that we are all successful.
We need partnerships with the Government of Canada and industry to achieve our vision. Our vision is guided by the adherence to fundamental principles.
We are a strong advocate of natural gas development in the Northwest Territories, but only if the development contributes to the long term economic success of the Northwest Territories.
In some instances we have taken the lead whether it is fighting for industry’s right to make decisions unfettered by government or by investing in infrastructure and training to prepare for development.
Now, we are looking to members of the business community like you to assist in ensuring the Government of Canada is ready to help us realize the benefits of development through much-needed investment in infrastructure and an equitable resource revenue sharing deal.
I have always been an advocate of partnerships. Today, I am asking you to partner with the people of the Northwest Territories in our efforts to reach our goals.