Text of speech (check against delivery):

February 28, 2012

Honourable members, thank you for the invitation to address the Senate Committee on Energy, the Environment and Natural Resources.

Despite having a land mass of nearly 1.2 million square kilometres, 14% of Canada, the Northwest Territories is sometimes left ‘off the map’ when it comes to national policy discussions. The Government of the Northwest Territories appreciates the interest of your Committee in the unique challenges, and tremendous opportunities, in Canada’s north.

With respect to energy, our key challenge is the lack of infrastructure and the crushing cost of basic services that our residents grapple with every day. For example, the southern part of our territory does have hydroelectricity, but the cost is 27 cents per kilowatt hour – double that of the Yukon and a number of times more expensive than in southern jurisdictions. Two thirds of our thirty-three communities rely on diesel fuel to generate electricity and this comes at a cost of approximately 50 cents per kilowatt hour. And as we all know, fuel prices are not forecast to decrease.

We often hear that 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. Sustainable energy systems are the backbone of a sustainable society and they require infrastructure to make them work.

The Government of the Northwest Territories recognizes the importance of sustainable energy systems in the north. For example, the Northwest Territories leads Canada in the installation of commercial-sized wood pellet boilers. As the cost of heating oil continues to rise – it was $1.62 per litre in Inuvik recently – the GNWT has installed biomass systems that can generate heat at the equivalent of 60 to 70 cents per litre.

As well, the Diavik diamond mine is currently constructing a 9.2 megawatt wind farm at their site, located approximately 300 kilometres northeast of Yellowknife. The blades for the turbines are being transported up the ice road as we speak and the installation will be commissioned by December 2012. You know that when industry starts making these kinds of investments, there is an economic case to be made.

Finally, many people might be surprised to learn that Fort Simpson, the home of the Honourable Nick Sibbeston, is also home to a new operating solar project that is larger than any installed in Alberta or Saskatchewan. Solar power does not seem to fit with our long winters. However, Fort Simpson receives more annual sunlight than Paris, Berlin and Tokyo.

The high cost of conventional energy creates a more accessible entry point for renewable technologies, and our cold climate and geographic conditions often force us Northerners to think ‘outside the box’. We urge the Federal Government to do the same, and partner with us to make the investments that unlock our energy potential.

The Northwest Territories has tremendous conventional energy resources as well. In that light, it is ironic that we pay some of the highest fuel prices in Canada, yet sit on top of some of the oldest continuously operating oil wells in North America, and a sea of natural gas. Approximately 16.2 trillion cubic feet of natural gas and 1.2 billion barrels of oil have already been discovered in the NWT. The potential is currently estimated at over 81 trillion cubic feet of natural gas and nearly seven billion barrels of oil. This has translated into some renewed activity lately. A recent land sale for petroleum exploration rights generated $536.2 million in work expenditure bids for 13 parcels covering 1.1 million hectares in the Mackenzie Delta and the Sahtu Region.

We are also focussing more and more on our robust offshore energy reserves. The United States Geological Survey estimates that the area north of the Arctic Circle has an estimated ninety billion barrels of undiscovered recoverable oil, 1,670 trillion cubic feet of recoverable natural gas, and forty-four billion barrels of recoverable natural gas liquids in 25 geologically defined areas thought to have potential for petroleum.

The Northwest Territories has – within its territorial waters – a piece of those resources in the Beaufort Sea which extends to the North Pole.

Industry recognizes that there is significant potential in the offshore. In 2008, companies committed to spend $1.2 billion to develop their petroleum Exploration Licences in the offshore.

Work is moving ahead to develop these leases.

In 2008 and 2009, Imperial Oil completed three-dimensional (3D) seismic and gravity surveys and undertook a field data collection program. The information gathered will be used to support the Ajurak exploration drilling program – the plan for which is currently in development.

In 2009 and 2010, British Petroleum completed 3D and two-dimensional (2D) seismic surveys and undertook a field data collection program.

And just last week, Chevron put forth an application to conduct seismic data collection programs in the Canadian Beaufort Sea. Chevron plans to run a 3D and 2D seismic data collection during the open water season of 2012 or subsequent years during the same period. The purpose of the proposed seismic data collection is to evaluate petroleum reserves in the area.

In addition to offshore potential, The Northwest Territories 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.  This is a nation-building project that 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.


• It is estimated that the Mackenzie Gas Project could contribute $68 billion to the Northwest Territories economy and over $86 billion to the Canadian economy.

The impacts of global warming are being felt all over the world, and especially 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 Northwest Territories also has significant hydroelectric potential. The Federal Government played a central role in developing our existing hydro facilities in the South and North Slave regions. This legacy infrastructure resulted from past mining development. The Snare hydroelectric facility was developed by industry and the federal government in 1948 to supply power to Yellowknife and the Giant Gold Mine. The Taltson hydroelectric facility in the South Slave region was supported by the federal government while leveraging the energy requirement of the Cominco Mine at Pine Point in the 1960’s.  It’s these types of partnerships that we need to return to. Partnerships that support economic development that benefits all of Canada while leaving behind a legacy of energy infrastructure that will benefit future generations.

There has been a great deal of discussion lately around the need for a national energy strategy. The Government of the Northwest Territories supports further work in this area and will stay involved to ensure that any national energy strategy considers the unique challenges and opportunities in Canada’s north.  The Northwest Territories will play host to the 2013 federal-provincial-territorial Energy and Mines Ministers Conference in Yellowknife. We will be using that opportunity, as we are with this one, to promote the energy potential of the north.

In closing, Canada and the Government of the Northwest Territories need to work together, think outside of the box, and make wise, forward-looking investments that will support the sustainability of the northern economy.  Relatively small commitments will ensure that our population continues to see a long-term, viable future for themselves in Canada’s north.

We need the assistance of the Federal Government to help us rein in our cost of energy and cost of living, so that our businesses can grow, and our residents can realize a better sense of ‘energy security’ at the household level. This is done through targeted infrastructure spending and creating sustainable energy options for NWT citizens, in which they can feel a sense of ownership and pride.

The Government of the Northwest Territories knows that energy and resource development will play a pivotal role in the future of our Territory. We hope that Canada will help us demonstrate our people’s leadership in these sectors, by helping us achieve our vision for sustainable Northern communities.

Thank you.