How should Alberta get its oil resources to market?
It's a question Alberta politicians and business leaders have been wrestling with for years.
With the Keystone XL pipeline facing political roadblocks south of the border, and Northern Gateway and Energy East facing similar scrutiny here in Canada, market access has been a challenge.
However, an idea floated by the premier of the Northwest Territories could offer a solution.
Premier Bob McLeod is looking into the idea of an "Arctic Gateway" pipeline that would carry oil from Alberta's oilsands up north to the Beaufort Sea.
McLeod was a guest on the Calgary Eyeopener on Monday. He spoke with host David Gray about the idea.
David Gray (DG): Why is your government opening the door to a new pipeline?
Bob McLeod (BM): Well, for a number of reasons. We have very significant oil and gas potential we've been trying to develop for the past forty years. We have all of this oil and gas that we're sitting on that's stranded, and we have the ultimate irony where we have to import all of our gasoline and heating fuel from the south.
We feel that we're looking at all options — one of the options could be that if we go north, then it would also allow us to develop our oil and gas potential at a significantly reduced cost as well.
DG: How much interest do you have from the Alberta oilsands?
BM: Well, I've talked to the Alberta government, I've talked to the Alberta premiers. The Alberta government did invest in a study that showed it was technically feasible to go north — and we concur with that. Now, we are looking at other options, including what is economically feasible.
DG: Draw me the route, if you can — what would it look like?
BM: Well, right now, the study that was done, we have infrastructure that goes — we have a railway that goes to Hay River, we have a barge system that goes up and down the Mackenzie, out into the Beaufort.
We have an existing pipeline from Norman Wells to Zama, we are extending the highway from Inuvik to Tuktoyaktuk. We are already hauling LNG by truck all the way from Delta, B.C. to Inuvik for electricity generation, and we have resupplied our coastal communities for heating fuel and gasoline from the offshore and brought it around Alaska up to the Northwest Territories. So we know that all of it can be done.
DG: Looking at the proposed route on a map, it looks very similar to the Mackenzie Valley Pipeline route. Am I right about that?
BM: That's correct. And that's why we're talking about an energy corridor — and that's what we'll be working [on] with our Aboriginal government partners. We already have approval for the Mackenzie Valley natural gas pipeline, that's gone through the regulatory process, it's received its certificate — necessity of public conveyance — and when that's built, our Aboriginal government partners will own one-third of the pipeline, and so we envision working with our Aboriginal government partners to come up with this energy corridor that we'll be working on.
DG: We are, you and I, adding sentences to what has been a very long conversation about the Mackenzie Valley Pipeline ...
BM: That's right.
DG: I think it's fair to say it's faced stiff opposition every step of the way. What significantly has changed?
BM: Well, I think that what we realize is that the price of oil is at its lowest. We know there's opportunities to — when the price comes back — we know that for the Mackenzie Valley natural gas pipeline, some decisions will have to be made in December of 2015.
So we think that if we can get rid of the lack of information and confusion, and if we can come up with a corridor that would have solid information and answers, I think that it would be a real good opportunity for us to be able to solve our stranded oil and gas problem — and also to be able to get it developed and sent to market.
DG: How much of a difference do you think an Arctic Gateway — I guess that's what they're calling it, the Arctic Gateway corridor — how much of a difference would that make to the Northwest Territories?
BM: Oh, it'd be a tremendous, tremendous difference. We are the only jurisdiction in Canada whose population is declining — it's declining on an annual basis, not by much, but it would certainly turn that around.
You know, we ask our children to stay in school, so we have to keep our end of the bargain to make sure there's jobs and business opportunities. And we know that if we have a transportation corridor in which we can ship our oil and gas to market, it'll be just the tip of the iceberg, because then there will be significant exploration.
Right now, we don't have — we're hard to attract exploration, because if an oil or gas company finds natural gas or oil, there's no way to get it to market. So it would be a real game changer for us.
DG: Have you got a price tag for this project? Or a timeline, for that matter?
BM: Well, that's part and parcel of developing this corridor. We expect to show that it'll be economically feasible, so we would have that information — my expectation is within a year.
DG: Well let's talk again then, if we can. Premier, thanks very much for taking the time to join us this morning.
BM: Ok, very nice talking to you David, have a good day.