The Northwest Territories has long dreamed of energy riches, but the dreams have frequently been dashed as markets shifted before multibillion-dollar projects could get started.
The Mackenzie Gas Project is on hold indefinitely, the crude-price collapse halted a promising shale-oil development and, late last year, Ottawa imposed a moratorium on Arctic drilling. Meanwhile, the cost of living in the north remains much higher than in the rest of the country.
Now, the territory, armed with new legislative powers following the devolution process, is rethinking its prospects – maybe northerners can develop resources for their own use, rather than wait around for multinational companies to build export-focused megaprojects.
Wally Schumann, NWT's Minister of Industry, Tourism and Investment, discussed the government's ideas with Jeffrey Jones between meetings with energy officials in Calgary last week.
How was the offshore moratorium received?
The biggest thing was that at least we had hope at one point. Now, we don't even have that for at least five years. We're committed to working with the IRC [Inuvialuit Regional Corp.] and the federal government on what it's going to look like in five years. We'll continue to pressure the federal government in devolution talks on offshore drilling. The Premier has had conversations on that with the Prime Minister. What it looks like and in what time frame, we're not sure yet. But that is a concern of ours, especially because IRC has had for a number of years a lot of exploration activity in their region, and it brought a lot of money and economies of scale. If it wasn't for the construction of the Inuvik-Tuktoyaktuk highway in the Beaufort Delta, there wouldn't be a whole bunch going on, and that's coming to completion as of this November. We believe that highway system will help develop that whole offshore industry moving forward but with the moratorium on it, that's paused it for now. So we continue to look at ways to move that forward.
Given the energy-industry downturn, what were the chances of any major spending there anyway?
The way most leases are held, you make a commitment in your bid to do a certain amount of work over a certain period of time. That type of work, even if it was minimal, has been taken away from us, especially from the people in the Inuvialuit region [along the Beaufort Sea]. They've been pretty much an oil-based economy for a long time. They've always had cycles. Some have been short, some have been long. But with the downturn, then the federal government imposing the ban, it really looks like doom and gloom now. We need to figure out a way to get the economy moving in that region. That's a tough one.
Are there solutions to the constant delays?
My answer is, maybe we should start looking internally. How do we take these resources and bring them to market for use within our own regions? Right now, we're transporting liquefied natural gas all the way from Vancouver to Inuvik for power generation. In the short term, that makes sense because we can do it cheaper than diesel fuel. But when you have a resource that's plunked right outside your back door, how do you capitalize on using that? How can you spread the cost over time to become effective and self-sustaining – looking after ourselves instead of exporting it?
As a government, maybe we've got to start looking at other possibilities, to lower our cost of living for Northerners and create an economy where we don't have to rely on outside markets so much.
How might this take shape?
Technology has come a long way. We've had a chance to meet with a number of proponents, innovative people who have come up with ideas and solutions I think we can look at and possibly have a pilot project. There are a number of individuals who are having a good, hard look at the Beaufort Delta in particular. There's a gas well there that's just three kilometres off the new highway, close to Tuk. From my understanding, it's a very good well, with tons of pressure that's viable for global export. Maybe we can look at tapping into that to supply the whole region, servicing Tuk, Inuvik and maybe new proposed mines in the Yukon that want to go LNG. It's something where we as a territory can help sustain ourselves rather than thinking grander LNG plans to service Asia. If all the stars lined up, it's something that could be viable in two or three years even.
How can Alberta play a role in this?
We've had those kinds of conversations on a minister-to-minster level. Every time I've met with the Alberta ministers on transportation, I've always told them they're like our big brother to the south. Whenever we build a project in the Northwest Territories, most of our commodities and goods come out of Alberta. Our relationship is very similar to Canada and the U.S. They're our biggest trading partner, located right to the south of us, so what's good for us is good for them.
This interview has been edited and condensed.