Northwest Territories Keeps Energy Dreams Alive Amid Oil ShockChris Fournier
The Northwest Territories, an oil-rich region extending into Canada’s Arctic, is seeking to keep its energy dreams alive amid slumping prices.
Bob McLeod, premier of the territory, is in Ottawa this week drumming up support for resource-development projects, including meeting with Prime Minister Stephen Harper and unveiling a feasibility study into shipping energy and mineral resources along the MacKenzie Valley to the Beaufort Sea.
“We need to find a way to get our resources to market and it is time for us to take a serious look at the northern option,” McLeod said in a speech late Thursday in Ottawa. “We recognize there will be a lot of questions about this option, and we intend to answer them.”
McLeod, who for years has pointed out to federal officials the need for a port on the Beaufort Sea, is seeking to alleviate what he calls a C$3 billion ($2.4 billion) infrastructure deficit, a task made more challenging by weak commodity prices.
Investors shouldn’t be worried about the price slump, he said. “Some may question why we would undertake this study at a time when oil prices have fallen so dramatically,” McLeod said. “I would remind them that resource markets are cyclical and lows will eventually be followed by highs.”
The study will gather information about a potential “energy, communications and transportation corridor” for shipment of everything from oil to zinc.
In a separate telephone interview today, the premier said he expects the study to take one year, and all options are on the table. In February 2013, McLeod told Bloomberg News he would welcome proposals from Alberta oil producers, facing bottlenecks to the south, west and east, to ship their product north. One way to do that would be by building a pipeline, he said Thursday.
The Northwest Territories and neighboring Yukon territory sit on 403 million barrels of conventional oil reserves, according to the Canadian Association of Petroleum Producers.
The territory is also the site of the proposed Mackenzie Valley Pipeline project to transport natural gas to pipelines in Alberta from the Beaufort Sea. The C$16.2-billion project has stalled amid weak prices for natural gas. Imperial Oil Ltd., Exxon Mobil Corp., ConocoPhillips and Royal Dutch Shell are partners in the project.
The proponents are expected to provide an update by December 2015 on whether construction of the gas pipeline will proceed, McLeod said.
“They may seek an extension,” he said by phone.