Debates of February 19, 2013 (day 9)

Page 12-14, Industry, Tourism and Investment, activity summary, corporate management, grants and contributions, nil. We have nothing to agree on. Page 12-15, Industry, Tourism and Investment, information item, corporate management, active positions.

Agreed.

Page 12-17, Industry, Tourism and Investment, activity summary, minerals and petroleum resources, operations expenditure summary, $5.725 million. Mr. Yakeleya.

Norman Yakeleya

Sahtu

Thank you, Madam Chair. I wanted to ask the Minister, regarding this, if he could do a very brief summary as to how his department has responded to this happening up in the Sahtu with regard to the oil and gas exploration, human resources capacity-wise and other socio-economic or straight economic plans for the upcoming years of the oil and gas exploration.

Thank you, Mr. Yakeleya. Mr. Ramsay.

Thank you, Madam Chair. We’ve had a number of initiatives that we’ve done in the Sahtu. Going back to last fall, we had the readiness session. When the Members asked me questions here in the House just recently about getting a post-mortem on this winter’s operations in the spring, that’s something I feel the department can certainly help out with, and I know Transportation’s involved in that as well, so we can look forward to that. We’ve also got this business development officer that you see in the budget at ITI.

Our staff have done a great deal in trying to coordinate, as the Member knows, all the activity that is taking place in the Sahtu. It’s been challenging for our staff there and they’ve been stretched pretty good over the winter months, especially with the activity that’s going on there.

We’ve also completed a study to estimate the potential impact of shale oil and gas development in the Northwest Territories, and we’re continuing to work with ENR and Health and Social Services to prepare an information package for the Executive Council on the impacts of shale oil and gas development in the NWT. We are also working with ENR on the response to the SCEDI’s report on fracking.

I mentioned earlier, we are going to try and plan another coordinated visit to a multi-staged fracking well. Whether it’s in southeastern Saskatchewan or in North Dakota remains to be seen, but we are going to make that happen sometime in April.

The Member can look forward to ITI’s continued support in his region. We also are the conduit to the other Ministers and we try to keep the other Ministers updated as to what’s going on in the Sahtu. You can see throughout the budget that government, whether it’s Education, Culture and Employment or other departments, are taking notice of what’s happening in the Sahtu and we’re going to need to make decisions relative to what is happening there. We continue to do that and I thank the Member for his question and his support.

Norman Yakeleya

Sahtu

The Minister pinpointed an issue with me that I would certainly like to have some access to once it’s vetted through the proper channels. That’s the study of the potential impacts of the Canol Trail in our region. I’d like to have a look at that along with other leaders in the Sahtu and Members from this side. Would he be able to have something ready for us in a timely manner once the Executive Council takes a look at it and comes over to our side with it?

We’d be more than happy once this gets complete, hopefully sometime this spring, and that we’ll get it to the Executive Council and share it with Members. I think it’s going to be very, very telling. Some of the preliminary numbers I’ve seen – and I know the Member was there at the readiness session and when we met with the chamber of commerce and business leaders in the Sahtu after that session – if you had 10 wells there what it would translate into straight up economic opportunity and it’s tremendous what would happen there.

What has to happen is the development has to be done in a sustainable manner and it’s the type of development that is generational in nature. It could be there for generations to come if it’s done in a sustainable, coordinated fashion.

Norman Yakeleya

Sahtu

The Minister is very accurate in regard to the potential in the Sahtu and the Canol Trail play of the exploration of talking to people who have worked or are working in those areas, the oil companies, the Minister himself has talked to some pretty well-informed people who are looking at the Canol Trail play, and I think we started to realize that the potential that he’s saying.

My point is that I appreciate it on behalf of the Sahtu for the readiness session, because that was very timely. That talks about leadership from the department, we look forward to those types of discussions and more concrete in terms of big picture and all the different fronts that we have to look at. We continue to support. That’s what the Sahtu is meeting right now, actually tomorrow, they’re going to Deline. They’re all going to go over there tomorrow and they’re going to have a look at these other issues here. They’re going to be talking amongst themselves as to the impacts that are happening right now in the Sahtu.

I’m going to ask the Minister from here on in as to whether we start to coordinate in some of these activities that are happening in our region. The whole Northwest Territories is going to benefit greatly on this, and if we do it properly, do it right, we can do well. We just need coordinating efforts from our land claims, our Minister, to other organizations.

I think I want to leave it at that. I do thank the Minister for responding to me in a timely manner to some of the issues I had to look at in the Sahtu region. I will talk more about the Department of Transportation with my colleague Mr. Menicoche on the…(inaudible)…that happened in our region. It just happened. The oil companies wait with the material at Wrigley and it cost them tens of thousands of dollars. We have to look at some of those things that are going to improve the safety but also ensure that we’re prepared from ITI and DOT. So those are the things that are challenging.

I think that we are up for the challenge for ensuring that next year we could greatly improve our transportation, because we have industry just begging to get into the region and do their work. We have a lot of workers from Gwich’in down in that area and I met them in Norman Wells. When I met those ladies at the restaurant, they were smiling. They were happy they were working. That’s what we want to see: people working. But we also have some good questions on the concerns of the environment, so we have to be careful.

I look forward to some more good information on this area here, because I have a lot of hope for the North and for the people. I think just like the diamond mines on this side of the territory, we have the Sahtu oil and gas exploration happening and we can benefit.

Those are my questions for the Minister on this front here. Thank you.

I thank the Member for the questions. I guess, first off, it just holds tremendous promise for the region and for the territory. Again, we can’t afford to mess this up. It has to be done right. We’re going to take our time, we’re going to get those guidelines together, and we’re going to work with the communities. There is so much opportunity there. If more wells are drilled and this resource is proven up and gets to a stage where it’s going to be commercially sent somewhere, there’s the existing pipeline south from Norman Wells. In discussions with experts and industry, if the volumes are there, it would necessitate another oil pipeline south from Norman Wells.

Also, there will be large volumes of natural gas and other gas liquids produced as a by-product from the extraction of the shale oil which could potentially lead to a gas pipeline, as well, and opportunities for communities down the Mackenzie Valley for natural gas. That also could potentially bring into sharper focus Mackenzie gas, a stranded resource that we’ve been trying to get to market for the past 40 years that could certainly bode well for the future of the Mackenzie gas, getting that to market as well. So there are lots of opportunities.

The Member is correct; this is far-reaching. I know MLA Menicoche was talking about some of the impacts recently because of road closures in his communities, as well, and in a resource play like this, that is why all the governments are involved. It’s going to impact the justice system. It’s going to impact schools, health care, social services. All of these government functions are going to be impacted. That’s why it’s so important that everybody is working on the same page and in the same direction when it comes to developing the potential that exists in the Sahtu.

I do think we’re going about it correctly. We need to see some more wells drilled there. It has to be proven up. Then I think the transportation infrastructure is going to follow closely behind that. You can look at Husky building a 40-kilometre all-weather road into one of their exploration leases, and that’s a 40 to 45 million dollar hit to build a road on the other side of the Mackenzie River. We know what it costs to build roads here in the NWT. There is willingness by industry, I would believe in discussions with them, to try to get a road built from Norman Wells to Wrigley. Once that resource is proven up, I think you’ll see that initiative move forward quickly. We’re hopeful that if we keep doing everything correctly and taking the right steps that that, in fact, is going to happen. Thank you, Madam Chair.

Thank you, Minister. Next on my list is Mr. Dolynny.

Thank you, Madam Chair. I’m going to start off probably with more of a clarification. This has to do with the NWT or NT geoscience offices. There was a note I left to myself last time we did it. I missed it last year and I made a promise not to miss it this year.

The funding to the geosciences office was included in the budget of 2011-2012 and it wasn’t included last year. The last known number that we had to reference this by was about $3 million.

Can the Minister indicate, within the minerals and petroleum resources budget here, where does the geoscience office funding fall under and what is that specific number? Thank you, Madam Chair.

Thank you, Mr. Dolynny. Ms. Magrum.

Speaker: MS. MAGRUM

The NTGO funding falls under the minerals, oil and gas portion of the minerals and petroleum resources. I don’t have the exact breakdown of what that amount is for 2013-14, but we do budget that amount every year. Thank you, Madam Chair.

Just a suggestion, Madam Chair, in the future. My recommendation is that should be a broken down expense line. It is a separate entity in itself and to bring into a general funding pool with so many different arms, it’s very hard to keep consistencies from year to year for budget requirements. So would the department consider including it as a separate budget line in the next budget cycle?

Thank you, Mr. Dolynny. Minister Ramsay.

Thanks, Madam Chair. Yes, we could look at putting a separate line item for that. Thanks.

Madam Chair, I appreciate it. The next question has to deal with the mining and oil and gas, or MOG, which is related on this section. This section deals with negotiating of the approved NWT diamond manufacturers. It deals with rough diamonds. It deals with the certification process. The last official certifications that this government has issued, in my humble opinion, was in 2009-2010, yet, as I think I mentioned in some of my earlier Members’ statements, a bit of a concern that we have retailers’ clubs out there that are still selling or allegedly selling certified NWT diamonds under the polar ice brand, which is another one of our diamond trademarks. Has the department done a clean sweep to make sure that companies aren’t fraudulently using our trademarks without the direct written permission of this government? Thank you.

Thank you, Mr. Dolynny. Mr. Vician.

Speaker: MR. VICIAN

Thank you, Madam Chair. Under the arrangements with previous manufacturers who are authorized to manufacture and use the government-certified diamond brand or the polar bear brand, those operators were then permitted to sell that product to authorized retailers in North America and elsewhere. Those retailers, of course, would have accumulated inventory and had the right to sell that inventory over whatever period of time necessary.

As committee is aware, the operators that we previously had a licence to do this no longer exist and the products that they would have sold to retailers would still be in inventory, potentially, in North America. Those are still allowed to be sold as government-certified or polar bear brand diamonds.

We continue to monitor closely the advertising practices across the country. We’ve had many experiences of what we consider inappropriate advertising of brand that we followed up on, and we rely on the services of both brand specialists and, of course, department staff to monitor this and track down any other complaints that are brought to our attention.

Overall, the permission to sell existing inventory exists by retailers that may still have inventory, but no further manufacturing sales under those previous arrangements are authorized. Of course, we’re working with our two currently approved northern-authorized manufacturers to deal with that for the going forward approach. Thank you, Madam Chair.

It’s encouraging to hear that we’re, indeed, keeping a vigilant eye on it. I think there are a number of us who are still a bit concerned that we do have some people within that old Retailers Club that are potentially questionable practices. I’ll leave it at that here.

The secondary industry of diamonds is one, and it’s really important to myself not just because it makes up a large part of the Range Lake riding but also for Yellowknife and the Northwest Territories. It’s an opportunity for us to have a rebirth in the industry. Not many times in the course of history one is able to get back into the game, so to speak, and not only just on a national level but on an international level.

Now, the Minister is fully aware that I’ve brought up in the House many times my concern of the 2010 Diamond Policy Framework, which falls into the guise of the mining oil and gas description in this area. My concern is the fact that the framework itself is a very, I call it, umbrella-type statement that deals with the approved diamond manufacturer status and it does not provide what I considered a detailed roadmap, a proper compass heading as to what we need to do to ensure that our rough diamonds do remain here in the North, that we do not have to start shipping up our rough diamonds or boxes out of the country and then to bring them back into our country and bring them back to the North for diamond polishing. It just seems like a very antiquated way of doing business, one in which probably caused the demise the first time of this industry.

So again, I do appreciate the hard work that’s been put into it. I know recently the Minister has undertaken an international tour with one of the Members, Member Blake, and I applaud the hard work of going to places like Antwerp and Belgium and London, as well as Botswana and Gabarun. Does the Minister have the ability to look at this policy to see if there’s improvement so he can reassure not only the people of Range Lake, the people of the Northwest Territories, that we indeed have a proper roadmap, that we indeed have a proper pathway to make sure that we’re doing everything humanly possible to make this industry successful with our opportunity of a second chance? Thank you.

Thank you, Mr. Dolynny. Minister Ramsay.

Thank you, Madam Chair. I thank the Member for his concern and his questions regarding the secondary industry. In my time as a Member of this House, I’ve always had the belief in the industry. The bottom fell out in 2008-2009. We went from having factories to having nothing, and certainly, with the sale of these two factories, we’ve got an agreement on the polar bear, we’ve got somebody who is very passionate about rebirth of the industry and reviving this industry in Deepak International. We are very excited about the future of the secondary industry here in the Northwest Territories, and through the framework it certainly supports a value-added sector. That’s something that’s key to all of this.

In my time, and I’ve been involved in the diamond file going back to 1997 when I was a city councillor with the City of Yellowknife on the Secondary Industry Task Force with the City of Yellowknife, when we got out and started marketing the city as the Diamond Capital of North America, one of the main things that, through my involvement in that, was it’s all about access to rough. If you have access to rough, people will come here to get that rough. With some of the changing of the landscape on the mining side here in the Northwest Territories, we are continuing a dialogue with Harry Winston on perhaps getting rough being able to be supplied here in Yellowknife. That’s a huge opportunity for us. We have to ensure that there’s a supply to northern manufacturers and we’ve got agreements with existing producers to see that happen.

Part of the exercise in talking to De Beers and going on that tour was to talk about Gahcho Kue and what is going to happen with the diamonds from Gahcho Kue. We need to ensure that there’s integrity in the system, there’s control, and certainly, this is a highly valued product. Just the export of diamonds alone puts the Northwest Territories, out of the 13 jurisdictions in Canada, fifth on foreign export in this country and it’s because of diamonds.

My belief is there’s a lot more diamonds out there. We’ve got some companies that are going to be ramping up exploration efforts this coming summer to find more diamonds and there’s a lot of potential on the existing properties, both at the former BHP and at Diavik, and we’re very excited about the future of diamond mining here, and the secondary industry here in the Northwest Territories.

Just in this past year and a half we’ve come a long way. We’re going to get these factories opened, we’re going to get this done. We are going to have an industry here and we’re also anxious to see what else we can do. I mentioned earlier, we are still in discussion with other companies that are interested in doing business here in the Northwest Territories, and it’s getting out and promoting the opportunity that’s here and seeking out that investment.

We hopefully will get some more investment here in Yellowknife and in the Northwest Territories when it comes to the secondary industry, and my goal as Minister is to ensure that there’s a ready supply of rough diamonds here. That’s what this is all about, is having the diamonds here so people can access them and we can have that secondary industry here and put 45 or 50 jobs in the Member’s riding. That’s what this is all about and I think we can do a lot more of that. Thank you.

That’s great. Thank you very much. I appreciate the Minister’s hard work and I don’t think that’s the question here. I appreciate everything that they have done to get us this far and all the hard work.

The question, Madam Chair, is pure and simple. If you don’t have a plan, if you don’t have a business plan, how do you communicate that to stakeholders? How do you bring investors? How do you bring the government in line with future funding or future growth, job prosperity and job security?

The current Diamond Policy Framework that was established in 2010 does not do that, it’s too limited in design. So I’ll just leave that one last question, I know my time is coming up here. What are we doing to secure the rough diamonds that stay in the North so we don’t have to send them out to evaluation, out to Antwerp or Gabarun or places like London, England, or even Dubai? What are we doing to secure that that rough diamond goes from a mine to Yellowknife, and then manufactured and polished here in Yellowknife and evaluated and graded? What are we doing for that?

That is exactly what MLA Blake and I were doing on our recent trip, is trying to talk to producers to ensure that rough diamonds are available here in Yellowknife. Again, that’s my goal as Minister, to get agreements in place that will see that happen. We’re looking at Gahcho Kue and, again, the landscape has changed with Harry Winston purchasing BHP, it’s going to be called Dominion Diamond Mining now, and the prospect, I know Rio is interested in looking at their operation when it comes to diamonds. There’s a prospect there that one company could own both of those mines and that certainly changes a lot of things for us here in the Northwest Territories when it comes not only to mining and opportunities for residents and businesses here in the NWT and extending mine life, but it also bodes very well for the secondary industry here in the Northwest Territories. Again, we continue that dialogue and discussion and we hope to have an agreement with Dominion Diamond sometime in the very near future. Thank you.

Thank you, Minister. Mr. Bromley.

Thank you, Madam Chair. I think this Mineral Development Strategy is something that’s underway. I know we’ve got a lot of happy industry out there. I’m not sure that that’s totally in line with the public interest, but we seem to be handing the strategy over to them and saying go for it.

But I want to bounce off the Minister the statement that we don’t need more mines as much as we need more residents working in the mines we have, and better economic rent or return from the extraction of our resources and then replacement of mines as they reach the end of production. A good way to do this would be to put an area up for bid when we need more development with the appropriate lead time, recognizing it takes five to 10 years. Then, of course, we’d have trained people ready for the jobs.

I know the Minister is familiar with the situation in Botswana where they own, I believe, 50 percent. The Minister is familiar with Norway, where the only resource and they contract out development with a guaranteed rate of return of about 9 percent for oil and gas. Obviously they’re, according to the Minister of Finance, up around $600 billion in their reserve fund now and investing it globally, because it’s so big that it affects the local economy if they start spending it locally. These guys have an assured future. Can we go there?

I think I remember hearing somebody else say the exact same thing that Mr. Bromley mentioned, a certain MP from around here.

Getting back to Mr. Bromley’s point, we have to use the devolution process. I think once devolution is upon us – the jurisdiction’s currently with the federal government – this Legislature, at some point in time, is going to be able to make decisions like the ones that Mr. Bromley talks about.

When it comes to the Mineral Development Strategy, I think it’s very important to realize that currently, when a deposit is discovered and it’s deemed economically viable to pursue, it takes approximately 10 to 12 years for that deposit to eventually become a mine. When it comes to diamond mines, I know we’re looking at opening a fourth mine at Gahcho Kue. We need to ensure that the exploration work is getting done, that the next Diavik or the next Ekati is going to be discovered, because, like I said, it’s going to take 10 to 12 years to get that mine up and running. We’ve been talking about Gahcho Kue, I first heard about it probably about 10 years ago.

Of course, much of what I was saying here was picked up by the Minister himself during the 16th Assembly when I really agreed with him on this. I wonder what the situation… I don’t hear these sorts of kerfuffles in Botswana or Norway. The process seems to be straightforward, the benefits to the public who own the resource are very straightforward, the standards are clear and are met and, in fact, are standards held up globally. We don’t hear about the sorts of things that we hear right here in the Northwest Territories, where we’re left holding the bag and our people have been removed from their hunting and fishing area essentially forever.

I would like the Minister to consider how we can get there. Is this not something really valid? I might have been referring to Mr. Bevington, a Member of Parliament and the NDP. I’m not talking party politics here; I’m talking benefits for the Northwest Territories residents and this government that will help provide services.

I look at the Aboriginal Pipeline Group and its involvement in the construction and development of the Mackenzie Gas Project, and that is a good example of the Aboriginal people of the Northwest Territories potentially owning one-third of a major piece of resource development here in the Northwest Territories, a $17 billion pipeline.

My belief – I know Mr. Bromley and I have worked together for a long time – is that we have to look at opportunities to invest in resource development. Whether it’s the Aboriginal development corporations or governments or our government, in fact, that’s how real benefits accrue to people.

I know Mr. Bromley highlighted Botswana with their role in Debswana, the 50 percent owned diamond mines there by the Government of Botswana. The benefits accrue directly to the residents of Botswana. One thing I learned when I was in Botswana was that every person that graduates from high school in that country can go to any university in the world and the government will pay for whatever program they want to take. Whether they want to become a rocket scientist or an engineer or whatever the case is, they pay the full shot for every student that graduates from high school in that country. That’s a direct result of them being involved in resource development in their country.

The other example, and it’s a good one, is Norway. Opportunities like that might sound far-fetched, but we’re not that far away. The opportunities in the Beaufort are tremendous when it comes to oil and gas, and they could very potentially rival the Gulf of Mexico in terms of what is there. If the Government of the Northwest Territories of the day, when those resources are developed, want to get involved, we have every right to make decisions and get involved. Those decisions will have to be made.

The process to get us through devolution and get devolution, I think, is a big step on our way to future prosperity. To everyone, prosperity is a little bit different, but I think if we look at all the opportunities that are going to present themselves here, there’s going to be some big decisions for governments in the future to be making here in the NWT. The big benefactor is going to be the residents here in the NWT, and they should be the big benefactor when it comes to resource development here in the NWT however we arrive at that. We might have differing opinions on how we get there, but I think we will get there and the people here in the NWT are going to be the benefactors of that.

I appreciate the Minister giving some serious consideration to this and looking for opportunities in his role as Minister.

Can we expect a rigorous analysis on how to increase the benefits for the public and thereby buy some real credibility for the Mineral Development Strategy that would incorporate some of the things we’ve been discussing here?

That’s exactly what this exercise is about, is to hear those views and get people involved. We are going to get diverging views on this, but this is part of the process and I think we just have to let it play itself out, get out, talk to the stakeholders, talk to the public and see where we go from there. The fact of the matter remains that the Northwest Territories is very well-endowed when it comes to straight-up resource potential, whether it’s minerals or oil and gas, and it’s all in how we manage those resources. Having this Mineral Development Strategy is part of getting us where we need to go and we will continue on that path.

Thanks to the Minister again for those comments. Sounds good.

I also appreciated the comment earlier from the Minister that there needs to be integration between these various strategies like the Anti-Poverty Strategy and so on. A challenging job, but I will be looking forward to that. I did appreciate that comment. That’s all I have on this page.

Thank you, Mr. Bromley. Page 12-17, Industry, Tourism and Investment, activity summary, minerals and petroleum resources, operations expenditure summary, $5.725 million.

Agreed.

Mr. Hawkins.

Thank you, Madam Chair. I move that committee reports progress.

---Carried

Report of Committee of the Whole

Speaker: MR. SPEAKER

Can I have the report of Committee of the Whole, please, Ms. Bisaro.