Energy dream burns bright in the Northwest Territories despite snags

Share

David Ramsay is a glass-half-full kind of guy from a land where the glass's contents tend to freeze.

As the Northwest Territories' Minister of Industry, Tourism and Investment, Mr. Ramsay spends much of his time promoting the region's energy potential and studying ways to tap it.

From a quantity perspective, it's tough to argue with the immensity of the oil and gas deposits of the vast and sparsely populated Far North. From a market perspective, Mr. Ramsay and his government keep getting dealt disappointment.

First, it was the Mackenzie Gas Project, laid low by skyrocketing costs and the U.S. shale gas revolution. More recently, as oil prices have crashed, they've watched activity grind to a near halt in the NWT's own shale oil projects in the central Mackenzie Valley and Chevron Corp. scrap plans for drilling in the Beaufort Sea.

No matter – there's always new opportunity. A priority now is for the territory to become Alberta's oil export solution while high-profile pipelines proposed to run east, west and south face regulatory delays and staunch opposition. Mr. Ramsay is optimistic that such a project could kick-start the others.

Last week, he was in Washington meeting with Alaska Senator Lisa Murkowski, chairwoman of the energy and natural resources committee, as well as other Alaskan politicos, about the potential for Alberta oil to flow into that state for export across the Pacific, via NWT.

"With Keystone XL still sitting on the sidelines and no decision being made there, we just want to be in the mix. We've had discussions at the political level, and those discussions and dialogue are going to move forward," Mr. Ramsay says.

"For us, it's just a matter of time before you get a major pipeline company interested in what we're talking about."

Alberta Premier Jim Prentice has expressed interest in the concept as he touts the holy grail of market access for the energy sector, even as the oil price collapse makes a shortage thereof less of an immediate crisis.

For the NWT, which recently won regulatory and legislative powers from Ottawa, it is one part of a larger plan to make the valley of the 1,650-kilometre Mackenzie River an energy, transport and communications corridor.

Pipeline ideas also include constructing a conduit north to Tuktoyaktuk, which has long had dreams of being a major Arctic port and energy operations base. The retreat of sea ice seems to have bolstered the technical feasibility of that.

A report by the firm Canatec Associates International Ltd., commissioned by the Alberta government, concluded that an Arctic option for shipping crude from Fort McMurray, Alta., would have benefits, whether it be to the Beaufort or across to the Trans Alaska Pipeline System. Economic viability is still the big question.

Mr. Ramsay is adamant that the NWT can't be just flow-through tundra for Alberta's bitumen. A pipeline has to foster development of homegrown reserves, too.

"The grand scheme of things for us and the future for us is developing our own oil resources," he says. "At Norman Wells, we've got our own shale opportunity, between three [billion] and five billion barrels, and of course there's opportunity in the Beaufort. Our game plan here is to get our own resources to market."

It can be a very long game, with no certain outcome.

It was in 1977 – four years before Tom Petty sang, "The waiting is the hardest part" – that Justice Thomas Berger told Canadians to take a decade to get the social and economic conditions correct for a Mackenzie Valley gas pipeline.

At the start of this century, Imperial Oil Ltd. and three of the region's aboriginal groups reached a landmark agreement to restart efforts to get a gas line built. By the time the partners won approval in 2011 following epic public hearings, the project no longer made economic sense because vast shale gas supplies had been unlocked next to major U.S. population centres. It remains unbuilt.

Those are tough lessons for the NWT, yet energy is still very much on the agenda, even with crude prices in a slump that shows no sign of letting up.

"If there's an opportunity to get something done and working with partners to do that, we have to move on it quickly," Mr. Ramsay says. "We can't afford to wait. Things like this take time – we all know that – but the sooner we do something the better."