Bob McLeod knows pipeline battles.
The Northwest Territories Premier and former industry minister is a long-time champion of the stalled Mackenzie Valley natural gas pipeline, a project four decades in the making and still far from fruition. His territory’s oil and gas reserves remain largely stranded despite rich potential – a linchpin, as he sees it, to drive the North’s economy for a generation to come.
But only if they can get them to market.
This year, Alberta and British Columbia have sparred over the $6-billion Northern Gateway pipeline, with B.C. threatening to scuttle it without a bigger slice of the revenues.
Now Mr. McLeod has waded into the fray, warning the impact ripples far beyond those two provinces. Without cross-border pipelines, the North will suffer too, leading Mr. McLeod to support Alberta’s hopes for a Canadian energy strategy at premiers’ meetings in Halifax and go public with overtures of exporting through the North, not the West.
“I see [B.C.’s stand] as a reduction in our options, if this is going to be the new order of doing business – you have to pay the provinces that are south of you to go through their lands to get your resources to market,” he said. “…We need to make sure we keep all our options open.”
That may include opening the NWT to Alberta oil, shipped from a potential port in Tuktoyaktuk. That notion already had Mr. McLeod under fire, a sign that any northern pipeline would face the same backlash from environmentalists and first nations groups that have turned Northern Gateway into a flashpoint.
Mr. McLeod says his priority is NWT oil and gas, but the territory has no capability to export its own oil – principally, a port.
“From an infrastructure point of view, it’s a huge burden. That’s really the problem,” said Doug Matthews, a northern energy consultant and former territorial manager for oil and gas development.
To build that infrastructure, he’d need a critical mass of oil or gas for export – he may need Alberta’s help if he’s to unlock his own territory’s potential. And anything’s on the table if it triggers development in the NWT, he said. “We have to use what we have to provide for the future of our people. If we can’t develop our oil and gas … it’s going to mean we’re going to have tough economic times,” he said.
His comments come as the battle continues over the fate of Gateway. On Friday, the federal government instructed a National Energy Board review panel, which is reviewing the Gateway application, to make a decision no later than Dec. 31, 2013. This is meant to speed up the process.
The federal involvement is essential, Mr. McLeod said, so that one province or territory can’t hold up the rest. “I don’t think one project should stop the development of a national energy strategy,” Mr. McLeod told The Globe and Mail.
The NWT has staked much of its future on its energy sector. It continues to push for a deal on devolution, which would see the federal government hand province-like control over resources (and resource revenue) to the territory. The territory has seen lucrative deals for oil and gas leases in its Sahtu region and in the Beaufort Sea. Barring a rebound in natural gas prices, which would likely resurrect the Mackenzie Valley pipeline, Mr. McLeod needs to reach new markets. That’s why he’s speaking out.
“I suspect Premier McLeod is just expressing that frustration that you can’t just say you’re an energy superpower, you have to act like one,” Mr. Matthews said.
Alberta welcomed the NWT’s support, with Energy Minister Ken Hughes saying “we’re prepared to work with any provinces that want to work with us on energy-related initiatives.”
But Alberta and the NWT haven’t had any formal conversations on opening up any northern export route – a costly notion.
“We really appreciate Premier McLeod’s statements. They demonstrate support for Alberta and for export access. We understand his sentiment,” said David Sands, a spokesman for Alberta’s Ministry of International and Intergovernmental Relations. “Obviously, the market would decide if an export pipeline to the Northwest Territories was economically feasible or not, and we’ll leave it to the market to decide.”
It is, as such, more of a warning or plea, rather than a plan, coming from the NWT Premier, who was similarly hopeful when the proposed Keystone XL pipeline to the United States was delayed, speculating it could finally lead to construction on a Mackenzie Valley pipeline. It hasn’t, as a glut of shale gas in the United States has kept supply high and prices low.
Without the 1,196-kilometre Mackenzie pipeline or another southern option, the North will need another outlet to reach Asian markets with its oil and gas – an infrastructure shortfall that would take years to address.
“The issue really is just lack of northern infrastructure – we don’t have a port, we don’t have icrebreakers, we don’t have coast guard capacity,” Mr. Matthews said. “It’s not impossible, but it would take time … It’s just frustration in the NWT that the guys down south can’t seem to get their act together.”