Questions and Answers | Resources and Energy Development Information

Minerals

The NWT is rich with gold, diamonds, precious metals and more. The following set of questions will help you answer why minerals are important to the NWT and how they contribute to everyday life.

What kind of minerals does the NWT have?

The NWT has many valuable minerals yielding rich resources such as:

Diamonds
Precious metals: gold, silver, platinum
Base metals: zinc, copper, lead, nickel, iron
Tungsten
Uranium
Cobalt, lithium and bismuth
Rare earth elements: neodymium, europium, terbium, dysprosium and yttrium, lanthanum and cerium
Coal

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How many operating mines are in the NWT?

Currently, there are three operating diamond mines in the NWT:

Ekati Diamond Mine, Canada’s first diamond mine, opened in 1998.
Diavik Diamond Mine, opened in 2003.
Gahcho Kué Mine, opened 2016.

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How does the Government of the Northwest Territories make money from mining?

The government collects money from mining in two main ways: taxes and royalties.

Taxes

Over the past three years (2015-16 to 2017-18), diamond mines have contributed 44 percent of the GNWT’s tax revenue. These revenues come in the form of:

Corporate taxes - A percentage of money taken from profits of companies doing business in the NWT. Currently, the corporate tax rate is 11.5% of corporate taxable income.
Property taxes - Mines in the NWT are charged taxes for the properties they hold.
Fuel taxes – Mines sites that are continually running power generation facilities, haul trucks and processing equipment, burn a lot of fuel. The NWT applies taxes on all fuels used for purposes other than heating.
Payroll taxes – Everybody who works in the NWT is charged a 2% tax on their employment incomes (NWT residents receive a refundable Cost of Living tax credit.)

Royalties

Royalties serve to convert the resources in the ground into a financial asset. The amount of royalties collected varies depending on how well mines do.

Royalties are calculated on both production value and projected profits. This means that what companies pay for NWT resources is based on both the amount of money their resources generate each year, and how profitable those resources have been.

Production value can be influenced by things like market prices and the quality of resources being extracted. Profits are influenced by how much is produced at a mine, and how much the company needs to spend to produce those resources.

The higher the production and profit, the more the NWT collects in royalties

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How much does the government collect from mining royalties?

The payment of royalties is regulated by the Northwest Territories Mining Regulations and the amount of royalties collected varies depending on how well the mines do. Since, 2008-2009, the GNWT has collected an average of $71.26 million annually. Resource revenues in 2017-18 were $66 million and most were diamond royalties.

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What is prospecting?

Prospecting is the act of looking for signs of a valuable natural resource deposit that could one day be mined for a profit. It is most often used to describe the work of exploring for minerals, metals, or precious stones. It is also known as “mineral exploration.”

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Do you need a licence to go out prospecting?

No, you don’t need a prospecting licence for amateur level prospecting within open territorial lands in the Northwest Territories. You are not permitted to remove minerals (pick up rocks) situated within the boundary of a recorded claim or mineral lease without the knowledge or consent of the claim or lease holder.

However, a License to Prospect grants the right to prospect for minerals on all public lands in the Northwest Territories that have not been withdrawn from staking for any reason.

Only a license holder can submit a Mineral Claim or register for a prospecting permit. A prospector’s license costs $5 for an individual over the age of 18 and $50 for a company, and must be renewed every year.

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What is a prospecting permit?

A Prospecting Permit will allow you to prospect in an area covered by the permit, without competition for a period of three or five years. Prospecting Permits held south of 68°N have a term of three years, while permits held north of 68°N have a term of five years. The area covered by a Prospecting Permit can vary in size from 8,319 to 22,900 hectares. Permits are not renewable and must be converted to mineral claims before the permit expires, provided the work requirements are completed. The application fee for a prospecting permit is $25.

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What is a Mineral Claim?

A Mineral Claim provides the exclusive right to an explorer to search a particular area for minerals under the ground. This does not, however, give the explorers the sole right to the surface area of that land. A Mineral Claim also does not give the explorer the right to develop the land for commercial production.

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How do you stake a Mineral Claim?

A Mineral Claim must be physically staked by marking the corners and the boundaries with posts (stakes). The application to record a claim must then be submitted to the Mining Recorder’s Office in the Northwest Territories, along with a registration fee. If the requirements have been met while staking the claim, the Mining Recorder will record the claim as soon as practicable after the 60th day following the day on which the staking was completed.

Claims are limited in size. To maintain the Mineral Claim, exploration work must be completed and renewal fees must be paid on an annual basis, dependent on the size of the claim.

Anyone with a prospector’s licence can stake a claim – or have a claim staked for them – on all public lands in the Northwest Territories that have not been withdrawn from staking for any reason.

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What is a Mineral Lease?

A Mineral Lease is meant to be the “next step” for mineral exploration and cannot be obtained without the work requirements of a Mineral Claim being met. A Mineral Lease allows land to be developed for commercial production. A Mineral Lease is required if you intend to sell or otherwise dispose of minerals with a total value in excess of $100,000 in one year. To maintain a Mineral Lease, an annual rent must be paid to the Government of the Northwest Territories.

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Someone staked a claim in my area. How long before it becomes a mine?

Not all mineral claims turn into mines. After a mineral claim is staked and the discovery is made, further study must be done to shed light on whether or not building a mine is a viable option. In order to advance, a project must be supported by many different facets, and if even one of these show weakness, it is enough to end the project. Some of the facets that need to be considered include:

Size, depth and complexity of the ore body;
Market value of the commodity to be mined;
Access to roads and power;
Cost to build and operate the mine;
Time required to get permits and licences;
How much money can be raised from investors.

This information is gathered through further exploration of the mineral claim, engineering studies, pre-feasibility and feasibility studies, environmental assessments, licencing and permitting. If a mining company is able to navigate this process with positive results, the project will proceed. This process could take 10 to 20 years.

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Do mining companies have to talk to communities before a mine is built?

Mineral exploration companies are encouraged to engage with communities at the early stages of exploration. However, companies that are looking to conduct more detailed exploration and eventually mining, are required to consult with communities and Indigenous governments and organizations.

This may involve written notification of proposed activities, meetings with the affected party (either over the phone or face-to-face), community public meetings, or even workshops conducted in the community.

The level of communication required is highly dependent on the size, scale, nature and stage of the project. In general, as a project advances, and potential impacts increase, more communication will be required with the surrounding communities.

Regardless of the communication approach, the goal is information sharing, between all parties involved in a project – communities, companies, and governments.

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What is the Mineral Resources Act?

The Mineral Resources Act (MRA) is a set of laws – known as legislation – proposed as a Bill by the Minister of Industry, Tourism and Investment Wally Schumann in early-2019.

If passed, it will guide a great deal of the way mining and mineral exploration and production in the NWT will happen, and how these should benefit the Northwest Territories. It is currently being considered by Members of the Legislative Assembly of the Northwest Territories.

For details, check out the Department of Industry, Tourism and Investment’s guide to understanding the proposed legislation here.

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Who is responsible for ensuring mining companies follow the rules?

Several different groups work together in what is known as a “Co-Management System”, to represent a wide-range of different perspectives. These groups are responsible for assessing, licensing, regulating and inspecting petroleum and mineral developments throughout the NWT to ensure natural resource projects follow the laws in-place to allow for sustainable development.

The Co-Management System includes:

The Government of the Northwest Territories
Regional Land and Water Boards
Mackenzie Valley Environmental Impact Review Board
The Government of Canada

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What is Co-management?

Co-management is a system that recognizes the traditional knowledge of residents and gives them the right to participate in decision making. In terms of our resource and regulatory Boards, co-management is a system of resource management that considers environmental, economic, and social concerns from Aboriginal, territorial, and federal levels of government.

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What is the Mackenzie Valley Resource Management Act?

This is a binding set of regulations that establishes regional land and water boards and an independent environmental impact review board. These boards work to ensure the rules are applied consistently and a variety of perspectives, including those of Indigenous groups with settled land claims, are considered during the planning stage of a project.

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What role do the Regional Land and Water Boards play in resource development?

The Regional Land and Water Boards regulate the use of land and water, and deposit of waste through the issuance of land use permits and water licences. These are impartial, independent boards that evaluate projects throughout the entire regulatory process — from proposal to cleanup – considering traditional knowledge and scientific information to make informed decisions.

The four Regional Land and Water Boards in the NWT are:

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What role does the Mackenzie Valley Environmental Impact Review Board (MVEIRB) play in resource development?

The MVEIRB is an independent, impartial board, who is responsible for conducting fair and timely environmental assessments in the Mackenzie Valley.

Occasionally, an environmental assessment is required before a Land Use Permit or Water Licence can be issued by the regional land and water boards. This happens when a proposed development may cause significant adverse environmental impacts or public concern.

The purpose of an environmental assessment is to evaluate proposed developments to protect the environment, including the social, economic and cultural well-being of its residents. Based upon the findings of the MVEIRB, the proposed development will be approved, be rejected, or be required to implement measures recommended as a result of the environmental assessment to avoid or reduce any impacts.

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Petroleum Resources

The Northwest Territories has significant and varied petroleum resources, both discovered and probable. This section of questions explores how exploration and extraction is important to the NWT economy and how it affects you.

How much oil and gas is in the NWT?

The National Energy Board (NEB) estimates that the NWT could hold as much as 37 percent of Canada’s marketable light crude oil and 35 percent of its marketable natural gas.

Discovered and recoverable potential for the NWT onshore and offshore is estimated at 1.2 billion barrels (bbl) of conventional oil and 16.4 trillion cubic feet (Tcf) of conventional natural gas. Ultimate unconventional potential is estimated to be over five times that.

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Where is oil and gas found in the NWT?

There are many confirmed oil and gas resources in the NWT, but historically, production has been centred in Norman Wells, Fort Liard and Cameron Hills.

For more information:

A map of oil and gas potential in the NWT: https://www.iti.gov.nt.ca/sites/iti/files/hydrocarbon_potential_landscap...

A summary of petroleum plays in the NWT: http://www.nwtgeoscience.ca/services/petroleum-play-summaries

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What is the difference between oil, natural gas and aviation fuel?

Oil, or crude oil, is the raw product that is extracted to create petroleum and diesel for transportation, lubricants, plastics and numerous other commonly used products.

Aviation fuel is also produced from crude oil; it is a specialized fuel with unique properties that meet the needs of powering aircraft (e.g. ability to handle extreme temperatures).

Natural gas is a naturally occurring hydrocarbon gas mixture consisting of mostly methane, and is used as fuel for cooking, for heating homes and buildings, and running power generation facilities.

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How does an oil and gas company make money?

Petroleum companies make money by selling oil and gas to industries, commercial companies and consumers. They sell at world market prices, which are set by supply and demand.

Before making a profit, petroleum companies invest time and money into finding the oil or gas, building pipelines or leasing railroad tanker cars or marine tanker ships to move it to refineries or gas plants. The oil or gas then needs to be processed into usable fuels such as gasoline, diesel, jet fuel, ship’s fuel, propane, Liquid Natural Gas (LNG), or other forms that can be used in modern vehicles, furnaces, electrical generating stations, aircraft or ships.

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How does oil and gas get from the NWT to refineries?

Once oil and gas resources are taken from the ground, they are fed into pipelines, which hold and transport the resources, often over long distances, to facilities where they get refined. This is how products like gasoline for your car are eventually made.

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What is the history of the Enbridge pipeline in Norman Wells?

The Norman Wells pipeline runs 750 km’s to Zama, AB, and was the first pipeline built through discontinuous permafrost. Designated Line 21 by Enbridge Pipelines (the owner and operator) it was completed in 1985 and built to ship as much as 50,000 barrels of oil per day. During its first eight years, the pipeline had moved more than 100 million barrels of oil. As production gradually declined, between 2007 and 2017, the pipeline shipped nearly 58 million barrels of oil.

Line 21 was shut down from January 2017 until September 2018 to replace a section of pipeline at the river crossing near Fort Simpson. Once that project was completed, the pipeline began operating again.

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How is seismic surveying used in the oil and gas industry?

Seismic surveying is a commonly used technique in petroleum exploration to find underground rock formations or reservoirs containing oil and gas. A survey uses sound waves generated at the surface and directed underground. Special sound recording devices at the surface collect and measure the waves as they reflect back to the surface. Different rock types and liquids reflect the waves at different speeds, which can give information about what can be found in the ground. All of the data collected is analyzed with computer programs that create images based on the reflected sound waves.

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If we have so much oil and gas in the NWT, why is it so expensive to heat my home?

There is no petroleum currently produced in the NWT for use by consumers within the territory. Oil produced at Norman Wells is shipped by pipeline to southern Canada, and the propane produced as a side product is used to help produce the oil. For heat and electricity, Norman Wells now uses wood pellets, propane or diesel, all shipped by winter road or by barge in summer.

Natural gas produced at Ikhil, 50 kilometers from Inuvik, was formerly used for heat and electricity in the community, but there is now only enough gas remaining to use as back up. Inuvik uses Liquefied Natural Gas (LNG) that is shipped in tanker trucks from Burnaby, BC and Elmworth, Alberta.

Shipping fuel by truck and barge has significant costs, and is especially expensive for communities not connected to a road.

Why is Inuvik trucking liquid natural gas from BC or Alberta?

In 1999, Inuvik began to use natural gas available from two gas wells at Ikhil, 50 kilometres from Inuvik, to replace the diesel fuel burned to produce electricity and heat for all houses and other buildings.

The natural gas was nearly depleted by 2012, so Inuvik went back to using diesel until 2013 when Liquid Natural Gas (LNG) storage infrastructure was completed. LNG is trucked from BC or Alberta and can be stored to cover freeze-up and break-up periods when trucks cannot reach the town.

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Who is responsible for ensuring petroleum companies follow the rules?

As with other provinces and territories, the GNWT, the Government of Canada, and Indigenous governments all play a part in making sure companies follow the rules and the NWT’s natural resources are well-governed.

Under this arrangement, for some activities, lands, water, and natural resources are governed by the GNWT, while other activities are governed by the Government of Canada and Indigenous governments. The GNWT can only make laws that govern those activities on NWT lands, and for those natural resources for which it is responsible.

The federal government holds jurisdiction on all offshore natural resources, including the petroleum in the Beaufort Sea. Since Devolution in 2014, the GNWT has had a role to play in governing onshore — meaning not in the ocean — lands and natural resources. There are some exceptions. For example, the Norman Wells oil field is a federally-governed site.

There are also various land claim and other agreements with Indigenous governments which grant these governments ownership over natural resources.

For detailed information on how the NWT’s oil and gas is managed, click here.

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Alternative Energy

Alternative energy is all around us and abundant in the NWT. This section explores the alternative energy evolution taking place in the Territory and how it affects you.

What is alternative energy?

Alternative Energies are energies that can be used to help reduce the use of fossil fuel, and lower our environmental impact. Some examples are: solar, biomass, geothermal, hydro and wind.

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What is solar energy, and how can it be used in the NWT?

Solar energy is light and heat from the sun that can be used to make electricity using solar panels and energy converters. This energy source can be used in many ways, from heating water and living spaces within our homes to generating electrical energy in schools and other large buildings. The GNWT developed its Solar Energy Strategy for the Northwest Territories with the vision to “Promote the use of solar energy technology and reduce the consumption of, and reliance on, fossil fuels for electricity generation in the NWT.”

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What is biomass energy and how can it be used in the NWT?

Biomass energy uses fuel that is developed from organic materials, a renewable and sustainable source of energy that is burned to create electricity and to heat homes and buildings. Wood pellets, made from compressed sawdust, provide the most commonly used source of biomass energy in the NWT. Other forms of biomass fuel are solid waste and decomposing vegetation that generate gasses, known as biogas, which can be harnessed and burned.

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What is geothermal energy and how can it be used in the NWT?

Geothermal energy is heat energy captured from deep underground. Water is pumped through pipes that are run through holes in the ground. The water is heated by the extreme temperature deep underground, and when it returns to the surface it is used to heat buildings, or the steam is used to turn turbines that generate electricity.

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What is hydro energy and how can it be used in the NWT?

Hydro energy is power derived from the energy of falling water or fast running water that then spins a wheel or turbine generating electricity. There are currently three hydro systems that provide electricity to homes and businesses in the NWT. They are Snare, Bluefish and Talston Hydro Systems.

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What is wind energy and how can it be used in the NWT?

Wind energy is the use of airflow through wind turbines to provide the mechanical power to turn generators creating electricity. To have sustainable wind energy, a sustained wind speed is required. The GNWT has been monitoring wind speed in the NWT since 2005, and has found that the best wind potential is in the Beaufort Delta Region.

Currently, Diavik diamond mine has the only four wind turbines operational in the Northwest Territories. Together, these four wind turbines are capable of generating 9.2MW to help power the mine and reduce consumption of fossil fuels.

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Can alternative energy replace nonrenewable energy in the NWT?

The short answer is yes. Governments, the scientific community, and industry generally agree that alternative energy will eventually be less expensive than, and as reliable and convenient as fossil fuels, and will replace fossil fuels as the main source of energy in the NWT; however, since the economy is so reliant on fossil fuels as an energy supply, there will be a slow transition period.

To see how the community of Colville Lake has begun to transition to alternative energy to reduce their fossil fuel consumption, see the video below:

Colville Lake, Solar & Storage Energy Project from Institute of the North on Vimeo.

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How could alternative energy affect NWT's economy?

Alternative energies can impact a local economy through the creation of manufacturing and installation jobs, lower overall energy costs for businesses and residents, and a lower cost-of-living depending on the performance of the investments made.

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Do all alternative energy sources "pay for themselves" over time?

There are a lot of variables when considering what a good alternative energy investment is. For example, location – a wind turbine installed somewhere without wind would never pay for itself. Investments in alternate energies in other regions have demonstrated it is possible to save money in the long-term.

For more information on alternative energy technologies, please visit the Arctic Energy Alliance website: http://aea.nt.ca/

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How could alternative energy sources be integrated into my home or business and can it contribute to NWT's energy grid?

Through the Net-Metering Program, people with solar energy generators may sell electricity they produce but don’t need back to the grid that they are connected to. They receive electricity cost credits in return.

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Are alternative energy initiatives spearheaded by the GNWT, communities, or private companies?

All three. The GNWT is ultimately responsible for the three hydro dams in the Territory, but there are other projects like the Colville Lake hybrid solar/diesel generator that private company, NTPC, helped build and the community operates.

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Can alternative energy initiatives be installed in protected areas, since they are renewable?

While it won’t be required, the use of renewable energy in protected areas will be promoted.

For example, both the proposed Ramparts and Thaidene Nene protected areas have special allowances that will allow for the use of local firewood for heating tourism lodges and cabins. Cutting of firewood isn’t usually permitted in a national park (which part of Thaidene Nene is expected to be), but the GNWT communicated to the Government of Canada that cutting firewood for local use is preferred over bringing in diesel or propane when there is firewood (renewable) readily available.

ENR’s draft Protected Areas Act states that mining, oil and gas development, and large scale energy developments won’t be allowed within protected areas. If that draft Act passes with that wording, there will be a clear emphasis on small-scale renewable energy.

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Will alternative energy affect the environment in a negative way?

Effects on the environment depend on the alternative energy source. For instance, some hydro dams physically alter the environment by blocking a waterway and flooding some of the surroundings. Wind farms can come in contact with the local birds. With advanced planning that takes these hazards into consideration, the effects can be mitigated.

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