CLASSIFIEDS ADVERTISING SPECIAL ISSUES SPORTS CARTOONS OBITUARIES NORTHERN JOBS TENDERS

business pages

NNSL Photo/Graphic

Subscriber pages
buttonspacer News Desk
buttonspacer Columnists
buttonspacer Editorial
buttonspacer Readers comment
buttonspacer Tenders

Demo pages
Here's a sample of what only subscribers see

Subscribe now
Subscribe to both hardcopy or internet editions of NNSL publications

Advertising
Our print and online advertising information, including contact detail.
SSIMicro

Home page text size buttonsbigger textsmall textText size Email this articleE-mail this page

NWT worst place for oil and gas investment: survey
Ranking in Global Petroleum Survey plummets in wake of natural gas pipeline review

Thandiwe Vela
Northern News Services
Published Friday, July 1, 2011

NORTHWEST TERRITORIES
Minister of Industry, Tourism and Investment Bob McLeod says he is not surprised by a recently released survey ranking the Northwest Territories as the worst place in Canada for investing in oil and natural gas exploration and development.

NNSL photo/graphic

Richard Nerysoo, president of the Gwich’in Tribal Council, made opening remarks at the 2011 Inuvik Petroleum Show. - NNSL file photo

In the Fraser Institute's fifth annual Global Petroleum Survey of industry executives and managers regarding barriers to investment in upstream oil and gas exploration and production, the NWT was ranked 103 out of 136 jurisdictions around the world, and behind all the Canadian provinces.

"I'm not surprised," McLeod said, citing other industry surveys the organization has conducted, including its annual survey of mining. "We're in the same situation there.

"Basically we're ranked very high in potential but very low with regards to investment because of the regulatory regime," McLeod said. "This is not something that happened overnight."

Major barriers to investment in the NWT in this year's report included uncertainty with regard to environmental regulations, uncertainty concerning protected areas, governmental overlap and the cost of regulatory compliance.

Fraser Institute spokesperson and co-author of the survey Gerry Angevine, also said he is not surprised by the findings because the NWT has pretty much ranked last in Canada every year. What did surprise Angevine however, was the deterioration of the NWT's global ranking, which plummeted from 74 out of 133 jurisdictions around the world in 2010.

Both Angevine and McLeod agreed the decline was largely influenced by the long-awaited return of the federal government's review of the Mackenzie Valley natural gas pipeline, which took six years, and the conditions attached to the decision to approve the project.

"The Mackenzie Gas Project review is the major thing that's happened in the last year," Angevine said. "I think that is what's causing the increase in negativity; the decision was a long time coming with a lot of conditions attached to it."

The review included conditions related to environmental factors and protected areas which would certainly impact the cost of regulatory compliance for companies who want to develop in the North, Angevine said.

With regard to a question on environmental regulations, this year's survey found a 71 per cent negative response, compared to 33 per cent last year. The negative response regarding the cost of regulatory compliance went from 50 per cent in 2010 to 88 per cent this year, and the question of uncertainty concerning protected areas went from 52 per cent to 80.

Despite the survey's findings of high perceived barriers, in most cases there were no respondents who said the barriers would deter them from investing in the NWT. McLeod said high resource potential in the NWT, including a potential of 87-trillion cubic feet of natural gas and seven-billion barrels of oil, is what continues to draw exploration and development investment.

"If the obstacles are high and the potential of return on investments are high as well, then people will still try to move forward," Angevine said. "But we don't try to measure the potential returns or geological potential. The only thing we look at is the commercial environment."

A total of 502 respondents representing 478 companies with a combined exploration and development budget of about $300 billion in 2010 completed the survey this year, according to the Fraser Institute, a Canadian-based research and educational organization.

Survey participants were instructed to only fill out responses for jurisdictions in which they were familiar.

A minimum of five responses per question is required to rank a jurisdiction and the institute did not receive enough responses this year to rank Nunavut or Yukon.

E-mailWe welcome your opinions. Click here to e-mail a letter to the editor.