Minister Ramsay’s afternoon remarks: Arctic Oil and Gas Symposium

MAR, 13 2012

SPOTLIGHT ON NORTHERN INFRASTRUCTURE

(check against delivery)

Thank you for the opportunity to again discuss what lies ahead for the Northwest Territories in the development of our world class resources, particularly in the oil and gas sector. This time, my focus will be on our strategy to improve the lives of northerners and Canadians through investments in transportation infrastructure. These investments are vital to realizing our government’s vision of a strong and prosperous economy.

The people of the Northwest Territories have been working toward that vision since the launch of John Diefenbaker’s ‘Roads to Resources’ and ‘Northern Vision’ campaigns more than 50 years ago. He inspired Canadians to believe in the economic potential of the North.Now, more than half a century later, we have diamond mines in operation and under construction. We have mineral and base metal mine development, significant hydro-electric potential, and proven oil and gas reserves.

In fact, petroleum developments alone are expected to contribute $59 billion to the gross domestic product (GDP), create up to 181 thousand person-years of employment across Canada, and generate up to $15 billion in government revenues.

The Mackenzie Gas Project can significantly expand oil and gas exploration and development, spin-off businesses, and employment opportunities that will last for generations. Indeed, the Northwest Territories has the potential to one day become Canada’s main source of natural gas production.

Nevertheless, resource development in the NWT faces challenges. Our transportation system is under-developed and, in large parts of the territory, only seasonal.

Ice and winter roads support oil, gas, and mineral exploration and development activity, and provide vital transportation links to many of our remote communities. But the changing climate means we can no longer predict the duration of our ice road seasons. Variable weather causes winter and ice roads to be more difficult and expensive to construct, even with improved technology and effort.

In the past decade, our government has invested $120 million in strategic infrastructure improvements. With funding contributions from the Government of Canada, the GNWT Department of Transportation has constructed 35 permanent bridges on the Mackenzie Valley Winter Road system. These investments have extended the operating season and increased the system’s capacity.

Partnerships with the oil and gas industry have also helped to extend the winter road operating season. Industry funding is used to accelerate and improve the construction standard of winter roads to better support heavy loads, including drilling equipment.

Despite these efforts, it is clear that our resource industries and our communities need the stability provided by all-weather roads.

The Mackenzie Valley all-weather highway project, from Wrigley to Tuktoyaktuk, will enable our territory to grow stronger and become more self-sustaining. The highway will strengthen connections between our communities and significantly reduce the cost of building infrastructure in the valley. Future large projects, such as the Mackenzie Gas Pipeline and the installation of a fibre optic cable, share a common corridor with the highway’s proposed alignment.

In 2009, an economic analysis concluded the all-weather highway will significantly benefit the energy sector’s corporate financial viability, possibly increasing after-tax cash flows by $1 to $2 billion. The same analysis shows the Mackenzie Gas Project will save more than $1.2 billion over the pipeline’s 45-year operating period by reducing future exploration and development costs.

And we’re making progress. In the June 2011 budget, Canada included $150 million over five years for the construction of an all-weather highway from Inuvik to Tuktoyaktuk – the northern-most section of the Mackenzie Valley Highway. The federal government described it as ‘a project of national significance because it advances the country’s position on security, sovereignty, and economic development’.

An economic analysis from 2010 concluded an all-weather highway between Inuvik and Tuktoyaktuk will impact natural gas field exploration and development by substantially reducing costs relating to drilling and well development in the region.

A great deal of planning work is required before starting a project of such magnitude. Department officials are working on a Business Case, which will be ready by the end of the month, which will assess procurement options. At the same time, discussions are underway with Canada toward a draft funding agreement. Discussions are also underway with the Inuvialuit Land Administration to secure land tenure for the highway right-of-way.

Meanwhile, the Department of Transportation is preparing to conduct geotechnical investigations at borrow sources along the proposed route, a required component of the environmental assessment process. The investigations are also vital to confirm the quality, source, and volume of granular material available. Initial estimates indicate we will need 4.5 million cubic metres of granular material to construct the highway. That’s a lot – enough to fill a cube about 50 storeys high. So we’re making good progress.

The remainder of the Mackenzie Valley Highway project is gaining momentum through innovative partnerships with Aboriginal and community governments. In collaboration with the Department of Transportation, using funding from the Canadian Northern Economic Development Agency, land claim organizations led, developed, and managed the delivery of Project Description Reports for this section of the highway. The project received full regional buy-in and the full support of community residents. The partnerships allowed us to maximize local involvement, increase local input, and maintain local control of the planning process.

Speaking of partnerships, I want to acknowledge the hard work of Cece Hodgson-McCauley and her Women Warriors, who for years tirelessly advocate for a highway through the valley. When this highway comes about, it will be in no small part because of Cece and her determination.

The Department has now received all four Project Description Reports, which are being compiled into one report for submission to regulators. With that work complete, we can proceed with engineering and environmental studies, and are able to move forward in our discussions with Canada on how the funding and construction of the highway will proceed.

As we continue moving toward our goal of a prosperous and self-sustaining North, the Government of the Northwest Territories is also intent on improving access to the resources in the Slave Geologic Province. The mineral potential in the area is among the highest in North America. The Department of Transportation is assessing the feasibility of constructing a seasonal overland road to replace 156 kilometres of ice road. We estimate it will extend the normal winter road season by up to 30 days.

I will conclude by reinforcing the importance of northern resources as a vital part of Canada’s economic future. To realize the benefits of those resources, we have to continue making strategic investments in transportation and other infrastructure. We are ready to partner with industry and the Government of Canada to make that happen.We are pleased to say that devolution negotiations are now in the final stretch, and we anticipate that authority over land and resources will be transferred from Canada to the GNWT in the next 2-3 years. Along with decision-making authority over land and resources, this devolution will provide the territorial government with access to significant resource revenues that will allow us to make additional infrastructure investments. Negotiations to date also include a commitment from Canada to work in cooperation with the GNWT on future projects of national and economic significance.

The vision of the Government of Northwest Territories is to improve the social and economic opportunities for northerners and all Canadians and to help ensure a sovereign, strong, and prosperous country for generations to come. I invite you to join us to fulfill that vision.