Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 1 - Evidence - November 21, 2013
OTTAWA, Thursday, November 21, 2013
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day, at 8:04 a.m., to examine the subject matter of those elements contained in Divisions 7 and 14 of Part 3 of Bill C-4, A second Act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures.
Senator Richard Neufeld (Chair) in the chair.
[English]
The Chair: Welcome to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. My name is Richard Neufeld. I represent the province of British Columbia in the Senate, and I am chair of this committee.
I would like to welcome honourable senators, members of the public with us in the room, and viewers across the country watching on television.
I would now ask senators around the table to introduce themselves. The deputy chair is not here this morning, so I'll go to Senator Ringuette.
[Translation]
Senator Ringuette: Senator Pierrette Ringuette from New Brunswick.
[English]
Senator Sibbeston: Senator Nick Sibbeston from the Northwest Territories.
Senator Black: Senator Doug Black from Alberta.
Senator Wallace: John Wallace, New Brunswick.
Senator Massicotte: Paul Massicotte from Quebec.
Senator Seidman: Judith Seidman from Montreal, Quebec.
Senator Frum: Linda Frum, Ontario.
Senator Patterson: Dennis Patterson, Nunavut.
The Chair: In addition, I would like to introduce the staff we have supporting us from the Library of Parliament, Mr. Marc LeBlanc and Ms. Sam Banks, and our clerk is Ms. Lynn Gordon.
Today is the second meeting of our pre-study hearings on Bill C-4, A second Act to implement certain provisions of the budget tabled in Parliament on March 21, 2013, and other measures introduced in the House of Commons on October 22.
As you are likely aware, we are one of six committees in the Senate who have been separately authorized, on November 5, to examine the subject matter of particular elements of Bill C-4 and report back to the Senate no later than November 29, 2013. For our committee, these particular elements are Part 3, Division 7, having to do with the Dominion Coal Blocks; and Part 3, Division 14, having to do with the proposed Mackenzie Gas Project Impacts Fund Act. This morning we will look at Division 14.
I am pleased to welcome officials who will guide us through this for the first portion of our meeting. In the second portion of our meeting, we would welcome, by videoconference from Yellowknife, the Honourable David Ramsay, but I don't believe he can attend. His deputy minister will be in his place.
To begin, I'm pleased to welcome, for the first segment of our meeting, from the Canadian Northern Economic Development Agency, Mr. Patrick Borbey, President; and Ms. Kate Ledgerwood, Acting Director of Policy, Northern Projects Management Office.
Please begin your presentation.
Patrick Borbey, President, Canadian Northern Economic Development Agency: Thank you, Mr. Chair. It's a pleasure to be here along with my colleague Kate to speak on this matter. I believe we have provided both an English and a French version of my comments. They're very short. If you would allow me, I'll walk through them in both languages, and then I would be very happy to answer any questions you may have.
The proposed Budget Implementation Act will repeal the Mackenzie Gas Project Impacts Act and replace it with the Mackenzie Gas Project Impacts Fund Act. These provisions will preserve the structure and criteria of the fund designed to offset the socio-economic impacts of the Mackenzie gas project should it become operational. It preserves the commitment to allocate $500 million to the fund. The provisions will result in the dissolution of the Corporation for the Mitigation of Mackenzie Gas Project Impacts, the Crown corporation established to administer the fund.
As the Mackenzie gas project is not yet operational, neither the Crown corporation nor the fund are active. The decision as to whether the project will proceed is the responsibility of the project's proponents. The minister responsible for the proposed Mackenzie Gas Projects Impact Fund Act will be designated by the Governor-in-Council. The designated minister will oversee the distribution of the funds set aside to regional organizations subject to terms and conditions that will be established. The Minister of Finance will have responsibilities with regard to the requisition of resources to the fund.
[Translation]
The Budget Implementation Act will repeal the Mackenzie Gas Project Impacts Act and replace it with the Mackenzie Gas Project Impacts Fund Act. These provisions will preserve the structure and criteria of the fund designed to offset the socio-economic impacts of the Mackenzie gas project should it become operational. The new legislation also preserves the commitment to allocate $500 million to the fund. The provisions will result in the dissolution of the Corporation for the Mitigation of Mackenzie Gas Project Impacts, the crown corporation established to administer the fund. As the Mackenzie gas project is not yet operational, neither the crown corporation nor the fund is required, but they are active. The decision as to whether the project will proceed is the responsibility of the project's proponents.
The minister responsible for the Mackenzie Gas Project Impacts Fund Act will be designated by the Governor-in- Council. The designated minister will oversee the distribution of the funds set aside to regional organizations subject to the terms and conditions that will be established. The Minister of Finance will have responsibilities with regard to the requisition of resources to the fund. Thank you very much for your attention.
[English]
The Chair: Thank you. We will begin with Senator Black.
Senator Black: Good morning to you both. Thank you very much for being here so bright and early.
I have two or three questions. My first question is: Why? What is the rationale for what you're proposing?
Mr. Borbey: The original fund and Crown corporation were established in 2006, and that was in anticipation of the project going ahead. At that time, there were no other alternative options to administer this if the fund should be required. The rationale is that we now have another alternative, and one of those alternatives, if the Prime Minister and the Governor-in-Council should so choose, is our agency — the Canadian Northern Economic Development Agency — which has a mandate to provide economic development funding and projects in the North. Again, if the Governor- in-Council should choose to proceed with the fund, we would be well-positioned to be able to administer that.
Senator Black: So, your position is that the more natural home for the fund is with your organization?
Mr. Borbey: Again, subject to the Governor-in-Council decision, but there is no longer a requirement for a separate Crown corporation to be able to do that.
Senator Black: Have you undertaken any consultation with any potential stakeholders with respect to that decision?
Mr. Borbey: The consultations with respect to how the fund will be administered will follow if the project is going ahead.
Senator Black: So, no consultations with respect to this decision to alter the governance model?
Mr. Borbey: No.
Senator Black: Very well. Thank you very much.
Give us a couple of examples, please, of what you would envision socio-economic mitigation efforts to be.
Mr. Borbey: I think our experience in looking at major projects that are going forward right now in the North indicates that the environmental assessment, which includes socio-economic impacts in the North as part of the mandate, does point to issues — both risks and opportunities — associated with new projects, for example, problems associated with the criminal justice system and alcohol and drug abuse. We know that once these projects go ahead there is a risk of increased problems in communities, so you do need to have programs or activities to be able to intervene in those kinds of areas.
There are also significant opportunities associated with the economic activity, including the possibility of groups and communities gaining contracts or subcontracting some of the work. For example, for a pipeline project, of course, there are huge opportunities for earth-moving equipment, for example, subcontracting, access to gravel resources, consulting, engineering work.
Senator Black: Back to the socio-economic mitigation, which, of course, this is designed to do, you do not have, at this point in time, a list of potential concerns? It's just socio-economic, loosely defined, at this moment?
Mr. Borbey: We do have an environmental assessment that was completed for the project, and we would also turn to that environmental assessment for some guidance as to what some of those socio-economic impacts may be, as we have in the case of, for example, the Mary River Baffinland project in Nunavut, which has a number of mitigating measures that have been recommended through the environmental assessment process.
Senator Black: That's very helpful. Thank you both.
Senator Ringuette: Thank you for being here.
Essentially, the issue here, because we're talking about the same amount of money allocated to the fund, is the structure of the Crown corporation to allocate funds to different mitigating projects. That responsibility will no longer exist, except it will be administered by you. So, it's just a technical thing.
When you stated some of the examples of projects, when you indicated the subcontracting and equipment necessary and so forth, are we to understand that the $500-million fund to look at the impact of the project will also be used for entrepreneurs who will be contracting some portion of the project for the Mackenzie gas pipeline? Are we to understand that?
Mr. Borbey: I was giving you examples of both the negative impacts and the opportunities associated with a project of that nature. If you have that kind of a project that's affecting a small community, does that community have the capacity to be able to respond and take advantage of the opportunities? That's where investments could be made. For example, one of the things we already do is help to fund business development seminars in communities so that people can take advantage of those contracting opportunities and learn how to set up a new business. Things such as skills analysis in communities to find out what kind of distribution of skills you already have available that can be accessed through a project like that and then to identify gaps as a result. That may then lead to some investments in particular skill-development activities.
Senator Ringuette: But your organization has been in place for quite a while, so I'm assuming that, for all of these responsibilities and analyses of the different communities in the region that you serve, you would have quite an inventory and list of potentials already in place. This leads on to my next question: How much of this $500-million fund will you be using for your daily operations?
Mr. Borbey: On the first intervention, I just want to say that our agency has been in place since 2009, so we were created after this fund and Crown corporation were created. We're relatively recent still, only four years old.
In terms of the second question, just remind me.
Senator Ringuette: How much of this half a billion will you be using as your operating fund?
Mr. Borbey: This is still highly speculative. As I said earlier, there has been no decision to actually ask the agency to administer this. If that was the case, then there would certainly be conditions put on how we should administer that, and they would include what proportion of that fund should be spent on administration.
Senator Ringuette: So, we're not looking at the totality of that half-billion-dollar fund being allocated to projects like the examples that you stated?
Mr. Borbey: Our objective, of course, would be to maximize the amount of that fund that would be allocated to real projects and to keep the overhead component as lean as possible. We already have an organization. We have offices in the three territories. We have officers already in place. How much more of a burden this would add we would have to analyze. We operate with about $50 million a year right now, so this fund, if we were asked to administer it, would double our annual funding. It's not an insignificant amount that would be involved. We would have to look at that and analyze it.
Senator Ringuette: This is a set fund. There is no time prescription involved; it's not a three-year or a five-year fund. It's a fund that, if you invest the money wisely once you have the money, will generate revenue to keep the fund going. I'm hoping that's the way that you see this fund moving under your administration.
Mr. Borbey: We'd have to look at the issue of repayable contributions and how much of what we would provide could be repayable. That would all have to be analyzed. You're right; some of that would be returned.
The assumption when the fund was created was that the fund would be administered over a 10-year period, given the fact that construction of the pipeline would take a number of years, so that 10-year period was what was originally envisaged. That's why I say roughly $50 million a year; basically, the $500 million represents that.
Senator Ringuette: Your assumption, I'm gathering from the legislation, is that once the legislation is passed, that the entire $500 million will be allocated to the fund, not on a 10-year basis at a $50 million a year. This is not what we're looking at.
Mr. Borbey: That will be up to the Minister of Finance to determine how that flows. It's a $500-million fund, but how it will flow, that's again up to the Minister of Finance at that time.
Senator Ringuette: But it's within the budget bill, so more information is required in order for the budget to be approved, and this kind of very important information in regard to the flow of funds, the flow from the federal government to the fund, and then how you will administer that fund is very important.
This is half a billion dollars. We're not looking at a few pennies here. This is a considerable amount of money.
I'd like to have more information, but, chair, if other colleagues have questions, I'd like to go on for a second round.
The Chair: Okay. Thank you.
Senator Sibbeston: I was going to ask our witnesses whether there have been any indications recently that the consortium interested in building a pipeline in the North is again interested in doing so over the next while. What is prompting the federal government to make these changes at this stage?
Mr. Borbey: The consortium, I do believe, has to report by the end of December on updating its cost estimates for the project and on whether it will proceed with a decision to construct. There is a deadline of the end of December for that. My recollection is that there is a deadline of the end of December 2015 for construction to actually have started; if not, the certificate from the NEB will expire.
Senator Sibbeston: I appreciate that, but my question was whether they know whether there's any interest by Esso and the consortium to actually go ahead with a pipeline. Has there been recent news about that or any information to you?
Mr. Borbey: Not directly to me, but there has been speculation in the media of the possibility of the project being reconsidered under a different configuration, possibly with an LNG plant, but, again, that's been speculative. We haven't been approached by a consortium that I know of, certainly not our agency.
Senator Sibbeston: What do you think is the reason why your agency is seen as the body that would deal with the funds in the North? I know there are a number of alternatives. The department itself can do it. They have offices in Yellowknife. But better than even that, the territorial government is established in the North. Why was the territorial government not given the opportunity to manage these funds? I've always thought anything the federal government does in the North, the territorial government can do better.
Mr. Borbey: I can't speculate on, again, that question with respect to the territorial government. I can simply just reaffirm that our agency, the Canadian Northern Economic Development Agency, has a mandate for economic development in the North. We have programs already in place that are similar to what —
Senator Sibbeston: This is 2009. You're just new.
Mr. Borbey: We have been doing that since 2009. We've administered a number of programs on behalf of the government, successfully, and, again, if called upon to administer this, we would also use the assets that we have on the ground and the programs that we already have in place. We hope that would also minimize the overhead costs associated with it and ensure smooth implementation of the fund, rather than with a start-up organization that would need a fair amount of time to get up and running.
Senator Sibbeston: Do you know the organizations that are likely to be asked to be involved in terms of the programs that they would provide? What kind of organizations would those be?
Mr. Borbey: Again, if the decision was to go ahead, we would reach out to all of the Aboriginal organizations in the region that are along the pipeline corridor. Those organizations are already clearly identified through the environmental assessment process that's already been followed, and that's who we would reach out to. They all have economic development arms that already have some capabilities there. We would be working with both the Aboriginal organizations, as well as its economic arm.
Senator Seidman: I would just like to ask you about one of the major changes in the piece of legislation which requires, instead of the funds being distributed by a corporation, they are to be distributed by a designated minister who makes the decisions and enters into the agreements with the organizations to which the contributions would be made. My question to you is: How do you see that? Because that would be, obviously, work and demand resources to deal with that. How do you see that?
Mr. Borbey: Again, with the big assumption that if my agency was asked to be that designated agency and our minister would be the designated minister, then we would first engage with significant consultations with the stakeholders — the Aboriginal organizations and the regional organizations — to be able to determine what are the right terms and conditions and criteria that should apply for the funds, including things such as repayable, how much should be repayable versus should be contributions that are non-repayable, and what types of areas, skills, business development.
I talked a little bit about some of the mitigation, some of the social investments that would be required. We would consult on that, and then, after that, we would have to report back to the minister and get approval through the cabinet process of the specific terms and conditions under which the program would be administered. That would take a fair amount of time to be able to get that right.
For the design of the program, we would have to look at the internal management of the organization to see how we can adjust to be able to meet the additional requirements and, again, the objective would be to minimize the overhead. Then we would administer it in a way that's similar to the programs that we currently administer, where we would seek proposals from interested groups. We would have calls for proposals, and then we would evaluate them, analyze them, work with the groups where the proposals may need to be strengthened, and then, after that, make recommendations based on the criteria for the minister to make a decision. Then, of course, we would manage contribution agreements, ensure reporting and accountability along the way, and make sure that we report on results.
Senator Seidman: I appreciate the delineation of a process here. What I see, though, is that there are a lot of details still left to be decided. For example, the types of regional organizations to which funds can be distributed are not included here, nor are the criteria that they must meet in order to be included. How will that happen? What do you see that looking like? What kinds of organizations, and what would the criteria be?
Mr. Borbey: Again, as I've said, we would engage in a consultative process involving all the stakeholders in the area, the Northwest Territories, including the territorial government, and we would develop those criteria based on the results of that consultation.
Senator Seidman: So the criteria would be developed in consultation?
Mr. Borbey: Yes.
Senator Seidman: That's really helpful. If I could just go back to the socio-economic impacts, because that's really critical, and the fact that — the word that's used is ``mitigate'' in the legislation, mitigate the existing or anticipated socio-economic impacts on communities. So ``mitigate'' has a very special meaning here, and it makes me think, well, there are negative consequences, right? I know that a couple of senators have already asked this question, but I'd like to ask for even more clarity, because what kind of negative socio-economic consequences are we preparing for?
Mr. Borbey: Again, I would have to go back to the environmental assessment to be able to identify some of those specific areas, but I talked a little bit about the issue of substance abuse and addictions, and it's been demonstrated that with increased economic activity, there is an increased risk. Therefore mitigation measures are required by both government as well as the companies.
The companies also take measures to be able to control or minimize that risk, but there are impacts on health requirements. For example, if there are additional workers in the area, in what way could the health system cope with the additional requests? There are a number of areas that would have to be examined to make sure we had measures in place to deal with that.
Senator Seidman: When you say ``measures'' and ``mitigation'' of these aspects — the health aspects, for example — does that mean that programs would be developed in order to reduce the likelihood or the risk for inhabitants, the people who live there?
Mr. Borbey: Again, we would do it on the basis of proposals brought forward to us for programs or activities that deal with the specific issue to be mitigated, yes.
Senator Seidman: Thank you.
Senator Patterson: Maybe for the benefit of my colleagues, I want to just say a few words of praise for CanNor.
CanNor is on the ground in the North. It has a firm presence in the three northern territories, with headquarters in my home community of Iqaluit. The small northern project management office has been, in my opinion, instrumental in bringing the federal family in the North together to promote a one-window and efficient approach to the regulatory process in all three territories.
Having said that, I want to ask Mr. Borbey, who I know was experienced in the federal world prior to his appointment as President of CanNor, to speculate: If we didn't repeal these provisions of the impact fund and we went ahead with a corporation for the mitigation of the impact of Mackenzie Valley gas projects — and I know this is speculation — what would that corporation look like? What would we have to establish as an alternative, say, to having your agency deliver the funds? What would entail setting up a Crown corporation, and where would it likely operate out of?
Mr. Borbey: Well, setting up new organizations, whether they're Crown corporations or departmental agencies, is complex. I mean, there are many legislative requirements and regulatory requirements that you have to meet.
With every new organization, you have to create a certain amount of structure and overhead. For example, there needs to be a deputy minister; there needs to be a deputy minister's office; and then there needs to be a corporate services group, a CFO and a head of human resources. In a small organization, it can be quite difficult to contain those overhead costs because there's almost like a minimum standard that you have to meet from an accountability and reporting perspective.
A new organization like that would have to repeat a lot of the work that we have done over the last four years in setting up that structure. Even though it is a Crown corporation, which has a different relationship with the government, you still have to have those basic functions in place. So, a fair amount of start-up work would be required and that would delay the real work, which is to get the funds into the communities and into the projects.
In our case — again, speculating — if we were asked to do this, we already have that structure in place. As you say, we have people on the ground. Whether it would be enough to manage this, I think probably not. We would need some additional bench strength to be able to do so, but it would be very small compared to the cost of setting up a separate, independent organization.
I hope that addresses what you were looking for.
Senator Patterson: Thank you. Senator Sibbeston asked, quite appropriately, about the future of the Mackenzie Valley gas pipeline project. I think it is probably realistic to say that after I think it was 11 years of the environmental review process — some would say it was 40 years of review, if you go back to the Berger era — by the time that torturous process was completed, gas prices had plummeted. It is probably fair to say there's not a lot of optimism in the North that the Mackenzie Valley gas pipeline will be revived, although by the time the review was finished, I think there was a lot of enthusiasm to see the project go ahead, but time had marched on and probably made it not feasible.
However, there is this LNG idea. I'm wondering if you would have any comments about an LNG project focused on moving LNG to markets in Asia and whether the Mackenzie Valley gas pipeline project could morph into an LNG project and maybe make this mitigation fund apply in a new manner. Is that on your radar screen as a possibility? Or would the LNG project be quite different from what was envisioned in the Mackenzie Valley gas pipeline?
Mr. Borbey: Thank you for that, and thank you for your good comments on our work.
I was involved in the torturous process for a number of years. Not the 40 years; I'm a little too young for that. I think we learned a lot as a result of that process, and that's why we have certain structures in place now and improvements that have been made, including the creation of the northern project management office, which is there to help navigate through the regulatory system in the North.
We are always open to proponents coming to speak to us about projects and whether they're configured as originally planned or reconfigured in a different way. We're very interested in meeting and talking.
We had discussions years ago with respect to Arctic island gas and whether that could be turned into an LNG project. There's also that possibility. There's a lot of gas up in the Arctic, not just in the delta.
If the project were to be reconfigured, then there are a lot of questions that need to be answered there by the proponents. I believe that the environmental assessment covers the project as currently configured, which is a pipeline running north to south. That would have to be re-examined, as we did in the case of the Baffinland project. There, once the environmental assessment was completed, the company decided to reconfigure the project and, therefore, we kicked in an expedited review process to deal with those changes. We would have to look at that and hopefully not engage in another long, torturous process.
I think we also have to be careful in that the original fund was created based on the project as presented by the proponents in 2004. That is a north-to-south pipeline going across all of the First Nations and Aboriginal groups along the Mackenzie Valley, including the Inuvialuit as well as the Inuit. If that project comes in differently, I don't want to speculate as to what that would mean and as to whether that fund would continue as planned or would have to also be reconfigured.
The Chair: Thank you.
[Translation]
Senator Massicotte: Thank you for joining us this morning. I am trying to understand why we are discussing the entity that will manage the fund. Why are we talking about that? Are you hoping we will mention it in our report for the minister?
Mr. Borbey: My intention is not to speculate. I am asked questions and given examples, and I try to help you by suggesting certain options. I do not want to claim that the Governor-in-Council will decide to ask our agency to manage that fund, if such a fund becomes operational. It could also be administered in a different way. As you said, even the territorial government has been mentioned as an option. That decision rests with the Governor-in-Council. I am just explaining how we could administer that fund if we were responsible for it.
Senator Massicotte: What is the point of your presentation this morning? What is the main message you want to communicate?
Mr. Borbey: We wanted to explain to you why the measure is being proposed and why that crown corporation, which was established in 2006, is no longer necessary.
Senator Massicotte: So the bill would be amended to allow for some continuity?
Mr. Borbey: Yes.
Senator Massicotte: And this relates specifically to the Mackenzie project and nothing else. The legislation is very clear, and we have discussed it. The legislation does not allow the minister to use that money for another project.
Mr. Borbey: No. The money is set aside for the Mackenzie project as originally configured.
Senator Massicotte: Is that money somewhere in a bank account or are we talking about an accounting allocation?
Mr. Borbey: The money is in the government's consolidated revenue fund. The amount is notional, but it is listed in the government's books.
Senator Massicotte: Has it already been approved as an expenditure in a budget?
Mr. Borbey: I cannot answer that question. You would have to put it to Department of Finance officials.
Senator Massicotte: Taxpayers were allowed to use $500 million from their fund to help this project. Is this standard procedure for other similar infrastructure projects in Canada?
Mr. Borbey: I cannot tell you whether similar examples exist elsewhere in Canada. This project was viewed as one of its kind in the North. According to the latest estimates, its value was up to $15 billion, and that kind of money would have a significant impact in the North. The government decided to create that fund because the project could have significant impacts in that region.
I cannot speculate on what is happening elsewhere. I can tell you that we are using our funds to support certain projects — and I did talk about the Baffinland project. We are also using the money we currently have to help and especially maximize the communities' opportunities to benefit from those projects. So we have done similar things, but on a smaller scale.
Senator Massicotte: Take, for example, TransCanada and other companies that are proposing pipelines in Canada. Are the socio-economic costs absorbed by the proponents or by the government?
Mr. Borbey: I cannot answer that. I am not familiar with those projects. I can only tell you about projects in the North, where the environmental review process includes socio-economic factors. Our system is somewhat unique because those factors are still very visible once the environmental assessment has been completed.
[English]
Senator Wallace: Mr. Borbey, as I understand it, the half-a-billion dollar fund was established in 2006?
Mr. Borbey: Yes.
Senator Wallace: It surprises me, from what I heard you say, that there really have been no criteria established as to how the fund would be allocated and what would qualify. I mean, that's 2006. We're 2013. Why would that be?
Mr. Borbey: The reason is that it was a notional fund that was established, and the Crown corporation also was notionally established. No actions were taken to staff that Crown corporation or to do all the work that I described earlier in terms of getting it structured and up and running.
The reason was that there needed to be first an indication as to whether the project was going to go ahead. Once that indication was cleared from the proponents, then that work would kick in.
We would have time to be able to plan on the creation of the corporation and the negotiations or consultations on the criteria, during that interim period, between the decision being made to construct and actually the activity starting, so there would be time to be able to plan for that.
Senator Wallace: Again, I doubt you could answer this, but it would seem to me that in establishing a fund of that magnitude, the criteria would be established upfront. Otherwise, how would you know what the figures should be? How do you know $500 million is going to satisfy the socio-economic impacts? Where does the number come from? It is a huge number.
Mr. Borbey: I can't answer that. Those decisions were made some years ago, before I was involved in the file. But you are right, it is a notional number and it hasn't been verified against actual program delivery or program demand activities.
The risk associated with consulting too early on something like that is that it would create expectations, and then it would create more frustration for the communities if at the end of the day the project was not going ahead. We have already had a number of delays, so I think that was the decision: to delay actual engagement on the criteria until such time as there was more certainty.
Senator Wallace: Is the $500 million a maximum fixed amount or can the amount of the fund grow? Is there provision for growth in the fund?
Mr. Borbey: It is pretty well set. However, there are interest provisions, and then there's also the issue of repayables that would have to be addressed. If there were repayables, obviously that would replenish the fund. We would have to again negotiate those arrangements. The Minister of Finance would have to determine those arrangements.
Senator Wallace: Is that a notional interest amount that, while the money still has not been allocated, it is in consolidated revenue? Is it notionally growing at a certain rate today as we speak?
Mr. Borbey: I can't answer that. Really, that's the Minister of Finance's responsibility, unless Ms. Ledgerwood has some information.
Kate Ledgerwood, Acting Director of Policy, Northern Projects Management Office, Canadian Northern Economic Development Agency: As the Minister of Finance or Finance Canada has indicated to us, the fund does not actually exist right now. It will not be created officially within the Consolidated Revenue Fund until such a time as there's a signal that the project will be advancing. The interest will be determined but through a rate and approach that is identified through the Governor-in-Council. That approach has not been identified yet in terms of how the interest will be calculated to grow the fund.
Senator Massicotte: It is a make-believe fund.
Ms. Ledgerwood: As already mentioned, it is a notional fund.
Mr. Borbey: But it's a real commitment in the fiscal framework.
Senator Wallace: Thank you.
The Chair: We will go to a second round for a couple of quick questions. I have two senators who want to ask questions on the second round, and that's all, as our next witness is standing by, by video conference.
Senator Black: I was confused when this started. It might just be me. I am actually more confused now. I think this is a make-believe effort. I understand that there is no fund. There is no project. If there is a project, the fund will need to be determined again whether it is applicable to the terms of the project. There is no one to administer the project. All we're being asked to do today is, in this make-believe situation, to agree that authority be taken from a make-believe Crown corporation and given to somebody. Have I misstated that?
Mr. Borbey: I would appreciate it if you could ask me a question, please. I'm not going to correct statements.
Senator Black: My question, frankly, is, why are we here? What are we doing?
Mr. Borbey: You are examining a provision that has been put forward through the Budget Implementation Act to eliminate a Crown corporation that was created some years ago for the purpose that you stated, and to replace a law that was created at that time with a new variation that will allow for that fund to go ahead under a different structure, if the project goes ahead.
Senator Black: If, if, if, if. I respect very much that you are here doing this, but, frankly, we should have had somebody from the minister's office who can talk to us about what the rationale is. I still don't understand the rationale for this, and I'm not sure that you do either.
Thank you, Mr. Chair.
Senator Ringuette: With all due respect, Mr. Borbey, chair, I don't have any further questions except that I agree with Senator Black. I think that the minister or someone responsible at the federal level — because we don't even have a minister identified who will be responsible — should come forth to answer our questions, because there are a lot of questions that have no answers.
I understand that it is a nominal half billion dollars, but, in approving this new structure, we also indirectly approve half a billion dollars of taxpayers' money going to this new structure.
I believe that someone from the Department of Finance — if not the minister, at least a deputy minister — should come forth and answer the very serious questions that we have, notwithstanding your good will to be a potential body to administer this potential fund.
There are a lot of questions here. Thank you.
The Chair: Well, thank you. I would like to thank both of you, Mr. Borbey and Ms. Ledgerwood, for coming forward to try to explain a process that is relatively, from my point of view, easy to understand.
The $500 million has been notionally set a long time ago. Your organization was created afterwards. You work in the North; you work with all of these organizations in the North. As you said, I don't know whether it would be transferred to you or not, but it would make better sense if it was because of your experience working with the organizations in the North — that is if the government were to maintain the same process and go out and appoint a Crown corporation, though that Crown corporation would have to familiarize itself with the organizations, with the project, and with all the things that would be going on with it. I could fully understand how they would — if, in fact, they do — transfer that responsibility to CanNor. It only makes good sense to me, and that's the only change that we're making.
To presuppose that everyone would know exactly what the impacts would be of a $15-billion pipeline that, really, hasn't been started yet — the industry, the private sector, hasn't actually come to the table with the money to say they're going to do it — and for government to go out and pre-study it and say, ``These are all the things that I think would fit into this envelope,'' would be the wrong way to do it. I would think you would go into it afterwards and start finding out from those organizations what they think they would need. In many ways, I think it is actually a good way to go.
Mr. Peter Vician, Deputy Minister of Industry, Tourism and Investment, is now with us by video conference.
Welcome to the meeting. I look forward to your presentation. Go ahead, sir.
Peter Vician, Deputy Minister of Industry, Tourism and Investment, Government of the Northwest Territories: Good morning, Senator Neufeld. Thank you for this opportunity. Good morning, senators. It is a pleasure to be here this morning on a cold Yellowknife morning at 27 below. It is nice to be here.
I would like to thank you for the opportunity to provide comments on behalf of the government of the Northwest Territories on this topic. I'm pleased the technology exists today and we're able to present this perspective to you by video conference.
Bill C-4 is a complex document with many areas of focus. The area on which I will focus my comments is Part 3, Division 14 of the proposed legislation, which focuses primarily on the administration of the Mackenzie Gas Project Impact Fund, first set up by the Government of Canada back in 2006.
Before I speak about the position of the GNWT on the matter, let me provide the committee with a brief history of the Mackenzie Gas Project itself.
When the MGP was first proposed, it was to be the largest infrastructure project of its kind in North America. Valued at $16.2 billion in 2007, the Mackenzie Gas Project, once completed, would allow the vast untapped natural gas reserves of the Northwest Territories to at long last make their way to energy markets in the South. After lengthy approvals and permitting process, the MGP received its certificate of public convenience and necessity in March 2011, which demonstrated that not only was the Mackenzie Gas Project important, but that its construction and eventual production was indeed in the interest of all Canadians.
Since then, falling commodity prices have resulted in little progress being made on the project. But as the interest in liquefied natural gas continues to increase, there is renewed interest in the Mackenzie Gas Project and what it can potentially bring to the NWT and the global energy market.
One of the more important elements to come out of the preparatory work for the MGP was in terms of the social and economic benefits to be enjoyed by the people of the NWT once the project began its operation. In this way, the construction of the pipeline, which would have some degree of impact upon the people of the NWT, particularly those living in its eventual path, would not have a long-lasting or detrimental impact and, in effect, there would be considerations put into place to mitigate any and all of those potential impacts.
In many ways, the Mackenzie Gas Project Impact Fund was even an additional mitigation factor to assist the people of the NWT should the need arise. The initial establishment of the fund itself was designed to be able to mitigate any socio-economic impacts that would be incurred by the construction of the MGP. The fund was initially set up to address the potential for gaps in areas not specifically addressed in socio-economic agreements negotiated between the MGP proponents and groups that would be directly impacted by the construction of the pipeline through the Mackenzie Valley.
The MGPIF was established in 2005 and then included in the Mackenzie Gas Project Impacts Act 2006, tabled and passed in June before coming into effect in November 2006. Since that time, there has been little or no action on the specifics of the act or the status of the fund itself.
The fund, which sits at $500 million, has remained largely dormant as a result of slow progress on the MGP. In fact, it was not until its inclusion in Bill C-4 that any changes had been proposed to the fund.
The GNWT has no concerns with the proposed changes to the MGPIF. The renewed focus on the Mackenzie Gas Project Impact Fund is welcome, and it would allow for the availability of funds once the MGP moves forward. As the decision to construct date approaches, the NWT is encouraged to see that important steps are being put in place that bode well for the future development of the MGP. Any movement or change in focus that directly benefits the future of the MGP is encouraging, as the fiscal requirements of a project like the MGP are huge on all sides of the equation, both for government and for industry.
In moving the responsibility for the administration of the MGPIF from a Crown corporation to the portfolio of a single minister, it would be expected that these funds could be made readily available should the project proponents decide to move the MGP forward. As to which ministerial portfolio the MGPIF would best fit, the GNWT would fully support any minister or department administering the MGPIF and we would welcome the opportunity to see this important fund be ready to be put into action.
While there have been delays associated with the development of the Mackenzie Gas Project, the GNWT has always remained committed to supporting this project. A project such as this one would see the development of our vast reserves in a way that would benefit not only the N.W.T. but Canada as a whole, and as an encouraging indication that the Government of Canada is committed to the future of the Canadian Arctic and all that it has to offer to the country and the global marketplace.
Petroleum resource exploration and development in the N.W.T. has always been an industry that has held great potential for the people of the N.W.T. but relatively little development to date. The MGP would not only change that, but would shape the economic future of the Northwest Territories for years to come.
Every bit of incentive and encouragement would help facilitate the initial stages of any project — even a project like the MGP, which would generate secondary benefits for Canadians beyond the borders of the Northwest Territories and our small population of 43,000 people. It is through initiatives like the MGPIF that projects can move forward, knowing that any potential challenge or setback can be properly and efficiently addressed.
In closing, I would like to once again say that the Northwest Territories is pleased to see the proposed changes to the MGPIF in Bill C-4. We look forward to its continued progress, and will welcome any opportunity to work with the minister assigned who is made responsible for the fund in the near future.
Thank you once again for allowing me the opportunity to appear before you and present the perspectives of the GNWT on this matter. It is an important item that is of great interest to the people of the Northwest Territories, so I'm always pleased to have this opportunity. Thank you, and I'm prepared to take questions, senators.
The Chair: Thank you, Mr. Vician. I was remiss in not mentioning that the Honourable David Ramsay, Minister of Industry, Tourism and Investment for the Northwest Territories, was scheduled to be here, but a family matter kept him away. That is why we don't have him with us this morning.
Senator Sibbeston: Hello, Peter. I understand and appreciate that you speak for the Government of the Northwest Territories when you say that the government is committed to the project and is supportive.
For the benefit of the senators here in the South who may not understand the situation, we in the North have gone through a long history and experience with projects like the pipeline. In the 1970s, when there was first talk of a major pipeline down the Mackenzie Valley, I would say the whole of the North was against the project because, at the time, land claims hadn't been settled and people were not really able to benefit and take part in the project. We went through an era of the Berger Inquiry, there was another pipeline proposal and a small pipeline built from Norman Wells south.
More recently there's been a discussion about the gas pipeline and I believe there has been a change in the people's attitude towards pipelines in the North. At one time there was resistance and reluctance to have the pipeline go, but now there is more support as settlement of land claims have occurred and they're much more able to participate and benefit from the project.
I wonder, Peter, if you could say something about that.
Mr. Vician: Thank you, senator, and good morning and thank you for that question. Of course, I doubt I could say it as well as you can. Your history and your knowledge of this matter are great and I appreciate the opportunity to add to that.
Let me just add to your points, which are well stated. The history has shown a significant change in the support for the Mackenzie Gas Project and resource development overall in the Mackenzie Valley. There are a number of good examples to demonstrate that.
First, let me use the process that emerged through the Joint Review Panel and the concurrent National Energy Board review of the project, where we heard explicitly by the Aboriginal peoples — particularly those in the Inuvialuit region, the Gwich'in region and Sahtu region — that there was significant support for development of the resources, of course in a sustainable and environmentally responsible manner. We could see those resources could contribute to the social well-being of the region, provide jobs and opportunities for business, and create an improved economy overall for the people for the long term. That clearly came out throughout the process of the hearings at both the Joint Review Panel and the National Energy Board, quite in contrast to what we heard years ago through the Berger Inquiry.
Probably most significantly was the establishment of the Aboriginal Pipeline Group, which was created by the Northwest Territories Aboriginal organizations and the government parties involved, to really take on an equity position in the pipeline development. That one-third equity position, which would evolve throughout the course of the project, would provide the Aboriginal organizations with really an ownership element in a development such as this, one that really turned the corner for how the project would proceed, quite a new approach for Canada and one that we're still hopeful to see move forward.
The other piece was this specific discussion on socio-economic impacts. In addition to access and benefit agreements that have been negotiated with the various Aboriginal organizations along the pipeline route, the Government of the Northwest Territories also established a socio-economic agreement with the proponents and in consultation with the Aboriginal groups to ensure the social and economic impacts would be considered throughout the course of the work.
In addition to that, the Mackenzie Gas Project Impact Fund emerged from a dialogue between the leaders of the Aboriginal organizations along the valley and the Government of Canada and the Government of the Northwest Territories during that period of 2005 to ensure that there was a fund that could deal with and mitigate those issues that would emerge. Again, it's an adaptive management process. Things were anticipated, but some things were uncertain, so this fund would be made available to attempt to deal with those uncertain areas, identify issues of social consequence of the project that weren't foreseen, perhaps, and evolved throughout the course of the project. This was a very important piece of the puzzle and the Aboriginal groups supported this measure as well.
Those are just a few examples, but overall the project has seen a change in view by the people of the territory. It's been approached correctly in terms of its environmental review and the certificate of public convenience demonstrates that it is a project that's ready to proceed once the marketplace is ready to proceed with its investment.
Senator Sibbeston: In the North, we've gone through a period of attaining responsible government, but in more recent years there has been a process of devolution, transferring responsibility from the federal government to the territorial government. Very recently there's been a devolution agreement to transfer the last area of federal control in the North, which is lands and the resources.
Do you know whether your government has had any discussions with the federal government about handling this fund? That seems appropriate. I have said what the federal government can do and what we in the North, the territorial government, can do better, so it makes sense that the territorial government would be the better agency or body to handle a fund like this — $500 million. Do you know whether there have been discussions or negotiations in this regard?
Mr. Vician: Thank you, senator. I can say today that, no, we have had no specific discussions with the administration of this fund in terms of anything different to what's being proposed here today in the legislation.
Senator Sibbeston: There's no restriction or nothing in legislation that would foreclose the possibility of the Government of the Northwest Territories being the body that controls this money. Is that something you would tell your minister to pursue?
Mr. Vician: Senator, I'll take this message back, but let me reinforce that the relationship we have with the federal government is collaborative and has been very effective in terms of the devolution file. It's a matter on which we anticipated full discussion and consultation with whoever is the minister responsible.
Mr. Borbey spoke earlier with regard to the different organizations that work here in the Northwest Territories. We have a very close working relationship with the Canadian Northern Economic Development Agency. I believe that many opportunities exist.
The most important issue, once the project proceeds, is that there be an effective mechanism to ensure that the fund is administered so that it targets the right issues across the territories. I'll take the message back and speak to the minister on the matter, senator. Thank you.
Senator Massicotte: Thank you for being with us this morning. I just want to summarize what I think we're trying to do this morning, and maybe you can help me.
I gather all we're doing from a legislative sense is removing the obligation to create a Crown agency of sorts to manage the possible future fund if the project proceeded. Is that a good summary? The money doesn't exist. It's still in the government coffers. The Crown agency has not been created. All we're doing is basically giving the minister future discretion on how and when this possible fund would be managed. Am I correct?
Mr. Vician: Thank you, senator. That's the Government of the Northwest Territories' understanding of the change, yes.
Senator Massicotte: So, we can speculate about who should manage it, but we're speculating. We're not there. We're not talking about that. We're not talking about actual funds sitting in a cash account. It's not there yet. It's quite semantic. We don't really define how the funds will be used or who will manage them. We're talking about a very minor legislative change, in fact?
Mr. Vician: Again, that is our interpretation of the act as it's presented. There have been preliminary discussions over the years with regard to the purpose or what the funds would be set up for and how they would be focused on particular areas of mitigation of the project, but, candidly, yes, what we're looking at here today, what we see we're looking at, is strictly an administrative change at the federal level.
Senator Seidman: I suppose I might just pursue a little more Senator Massicotte's question to you, because actually it's really good to have your testimony after some of the confusion that kind of grew around this table as we have been discussing this for the last hour. To see that the Northwest Territories is behind these changes is really excellent.
If I could just pursue a little more, though, you said as the decision to construct date approaches. The end of 2013 is the decision date; is that correct?
Mr. Vician: There are two decision dates identified through the CPCN. First is a reporting date at the end of 2013. My understanding from discussing this matter with the proponents even last week was that they were on track to respond to the project in terms of where it was at, its status and what the next steps would be. The key date is the end of 2015, which is where essentially the decision to construct must be reported by the proponents. At that point, really, whether they proceed or not proceed will be up to the regulator to ensure that the CPCN is adhered to. In essence, the CPCN specifically stated that the decision to construct date was the end of 2015.
Senator Seidman: That's helpful.
You suggest here that when you say, in moving the responsibility for the administration of the MGPIF from the Crown corporation to the portfolio of a single minister, it would be expected that these funds could be made readily available should the project proponents decide to move forward. You're saying that really this is a facilitator. This facilitates the funds being made more readily available than if it were a Crown corporation administering it.
Mr. Vician: Senator, again, the administration of the fund from our perspective in a Crown corporation versus a minister, in simple terms, we see perhaps more simplicity in this process. A minister's responsibility can effectively deliver the purpose of the fund and, like I said, it simplifies the process in our mind.
Senator Seidman: Sure, and that's helpful to know from your point of view.
If I might just ask you something else that we have been discussing prior to your coming on video conference and that has to do with the mitigation of the socio-economic aspects of this. You did mention potentially some of these things. You didn't specify clearly what you saw as the socio-economic detriments that would need to be mitigated. Could you just give us a little more clarification on that?
Mr. Vician: Thank you, senator. Perhaps I'll use the example of what we've been working with for years as it associates with other resource development, such as the diamond mine activity here in the southern region of the Northwest Territories.
There are many elements of development that often are difficult to identify specifically during the course of a project review but, generally speaking, they are human impacts, impacts that generally are associated with the change in the development in the region — for example, the increase in terms of a workforce; the impact of a substantial wage economy coming into a region that perhaps hadn't seen that degree of wage economy; factors associated with the stress associated with the change in a work lifestyle. These types of projects change the way traditional communities operate, so the purpose of the fund was to really tackle those things in a way that we would incorporate a planning model at the front end of the project, once things were announced, to ensure that we could respond to those areas that needed attention.
Of course, the most important one in the territories' mind is the issue of education, and we've continually advocated for the development of a workforce that is a resident workforce and that young people have opportunities for that kind of work. The first part of education is awareness and ensuring that the young people and the parents and families have an understanding of the opportunities and the significance of the project so they can create a future for their families. That was where this was headed.
Some early work was done on regional planning for the fund years ago when things were moving along faster for the project and, at that time, many of the communities contributed to the initial identification of the issues. Some of them were more difficult issues, candidly. As we have in the North Slave region, smaller communities faced an impact of a large salary coming into the community family base and having to deal with that. How do you cope with having a $100,000 family income essentially changed overnight, and what do you do with financial management? How do you deal with money management? How do you deal with making good choices in the family sense? Those are the key kinds of things that we would anticipate we would talk about — financial management skills and family counselling opportunities.
On the extreme side is really a candid statement that there are sometimes elements that do emerge that we have to deal with. We have had experiences in some of our communities with some degree of increased conflict, crime sometimes, having assurance that we are tackling those right up front and not waiting for a reaction point to basically trigger a response.
These funds could be targeted to justice areas, to predominantly education areas, and to family support area, really ensuring that there's a collective attitude that we can make the project work in an adaptive manner over the life of the project. I hope I've helped with that answer.
Senator Seidman: You certainly did help with that answer, so thank you very much.
Senator Patterson: I'd like to thank Peter for appearing and recognize his long service in the territorial government.
I've got two questions. Firstly, as you would know, Peter, there's been quite a lot of media speculation that this bill, especially in the North, is an encouraging sign that either the Mackenzie Valley gas pipeline will be revived or that Arctic gas, of which we have significant deposits, may be delivered to markets in a different form through an LNG project. I know your minister, Mr. Ramsay, was interviewed on this subject.
You mentioned you've been in touch with proponents recently. I know this is speculative, but I wonder if you could share with the committee the understanding of the GNWT, which of course is soon to have major new responsibility for onshore resource development. What is the understanding of the GNWT about what might lie ahead for development of natural gas resources in the territory?
Mr. Vician: Thank you, senator, for that question. I appreciate that.
It's an interesting time when it comes to the natural gas markets. We are all aware, the committee is fully aware, that the price point for natural gas has changed because of the large supply that we have in North America today. Tthe marketplace is different than it was just a few years ago. This has placed the Northwest Territories in a very challenging position, with the wealth of resources in natural gas and oil essentially being stranded in the Northwest Territories until such time as the marketplace identifies a way to get those products to market.
Our recent discussions with the proponents, particularly Imperial Oil, have signalled that there has to be a different way of seeing the marketplace managed for the purpose of natural gas and that way, at this point, appears to be through the liquefied natural gas approach and seeing ways of exporting this product outside of the continental demand regime.
We believe that the recent announcements by Imperial are very positive, that they are looking at the project in a way that sees Mackenzie gas — conventional natural gas — enter into the framework of distribution in Canada, particularly the framework that exists in the Western sedimentary basin, combined with what we see in the Horn/ Montney area of northeastern B.C. Combining that with an export model seeing gas brought to tidewater for export is probably the most viable and best scenario for seeing MGP gas get to the marketplace.
There's not an immediate demand for the Mackenzie gas today in the marketplace. We're seeing gas supply in Alberta and in the Northern States. Of course, on the eastern side of the country, there's a demand, but, again, it's supplied by regions like Pennsylvania, which has changed the entire dynamic of the supply/demand chain.
We feel very positive about the message, and I believe Minister Ramsay has conveyed, both publicly and with the proponents, that we encourage them to continue to proceed on that plan. We are quite hopeful of that message emerging here in December, when the proponents are required to report under CPCN, and, until such time as we hear that message and then see the work move forward, really we're all in a waiting position on the project.
Overall, the message of the GNWT is that we have a wealth of resources. We need to see these resources developed for the betterment of the people of the territory, and there needs to be a way of seeing those resources transported to marketplaces, whether they are foreign or domestic. We see LNG as the most viable solution for that in the years to come. Thank you, senator.
Senator Patterson: Thank you. That was very interesting and helpful.
If I may have one final question, Mr. Chair, thank you for the clear message from the GNWT on this bill.
You said in your remarks: ``It is through initiatives like the Mackenzie gas project implementation fund that projects can move forward.'' I noted the ``s'' on the word ``project.'' I also want to thank you for explaining that the fund would be necessary given the colossal impact a project of this magnitude would have on the very much developing and very much rural economy of the NWT.
I guess my question is this: Some of my colleagues have described this bill as being kind of illusory. There's no project. There's no fund. Do I understand from your remarks that this will help projects move forward, that, in fact, the NWT sees this bill as good news because it's preserving the fund, or the possibility of the fund, in case developments, as you've just described, could occur, even though they might be in a different form from the Mackenzie Valley in-the-ground pipe, north-to-south pipeline? In other words, this is my question: If this gas resource morphs into an LNG project and changes form, can you see the GNWT encouraging the federal government to preserve the fund and apply it to a different project than might have been considered when the Mackenzie Valley gas pipeline was more alive than it is today?
Mr. Vician: Thank you for the question, senator. Let me first say that the GNWT sees this fund as one of the conditions precedent for the project moving forward, just as the regulatory certificate and the commitment to the Aboriginal pipeline group in terms of equity of Aboriginal ownership in the pipeline were requirements. Just as the access to benefits is required, this socio-economic impact fund was fundamental to overall approval and support of the project. Therefore, preservation of the fund is an essential component of moving the project forward. We would not anticipate anything different. We would not anticipate the fund not proceeding. All of the conditions are currently precedent for the project to move forward except for the market condition today — the price of gas and the demand for that gas. An external factor is really the hold-up today in the project proceeding. We think that's essential.
You mentioned the purpose of the fund and its future purpose. We have signalled already that it is critical that funds such as this are readily available for the purpose of development, particularly in Northern regions of the country that have a significant impact as a result of resource development.
Currently, in the Northwest Territories, activities in the Canol shale oil region, the Norman Wells area, the Sahtu area of our territory, are significant. It is a huge resource basin, one that similarly would contribute to the energy requirements of the country and potentially to the export potential for the country. That, in a similar way, is a flag that we've placed, stating that that impact fund, when that project moves forward into the production stage — it's currently in an expiration stage — would be something that we would ask the federal government to consider. It really is no different. It's a resource development activity that needs a number of things to happen before it proceeds — the supply of the product and the marketplace, but, more importantly, how it's going to be approached and managed in the territory.
We've continually stated that Aboriginal participation in the project development is fundamental. We'll continue to talk about socio-economic impacts. I see the continuation of the principle of this fund being a critical demonstration by the federal government of sustainable and appropriate resource development in Canada's North.
Senator Ringuette: I see that there is no issue of the preservation of the funds because no funds have been committed. It's a political commitment that has been in place since 2006 up until the time that — hopefully — a project will be going forward. From what I understood, you will only know in 2015 if the consortium decides to go ahead with the project. Did I hear you right? We're looking at at least two years down the road?
Mr. Vician: Yes, senator; correct. The decision to construct is 2015, the end of the calendar year. I think we await a signal of the approach to that decision to construct here at the end of 2013, and we'll have more comments on that matter once we hear from the proponents.
Senator Ringuette: The other issue that I want to highlight — and I guess it goes back to the same comments that Senator Sibbeston was talking about earlier — is all of the different potential issues, if the project goes ahead, that you have identified — education, training, probably additional health services and so forth. These are all services that are already provided by the Northwest Territories Government to the citizens, but I do understand that there would probably be additional requirements in regard to quantity and, if you look at training, more specific programs to be put in place by your department of education.
I would very well see that the Northwest Territories Government would be the entity receiving the money because you are the entity that would provide the services to the citizens in regard to social impacts and economic impact also. I guess it is more a comment than a question. I would very much see that your organization, your government, would be the recipient of the money in this fund in order to provide additional services that you are already providing to your citizens. Thank you.
Mr. Vician: If I may comment on your point? I would like to thank you for that. I think you identified it very well.
Let me say that there are multiple entities that could possibly work with the federal government. We currently work closely with the federal government with many different departments. We work closely with CanNor with regard to economic development issues in the north.
Yes, we are well established to be the delivery agent for many of these issues but, in a very similar way and a very complementary and more effective way often, our regional Aboriginal governments are quite established today in the ways that they can deliver economic and social programming to their constituencies throughout the territory. We would see the administration and the implementation of the fund to be essentially a collaborative partnership approach with Aboriginal organizations, the Government of the Northwest Territories and the federal agencies that would oversee the responsibility of administration of the fund.
It is not so much a question of having the capacity to bring that forward; it is the issue of the capacity in terms of resources associated with the scale and impact of such a large project and how significant that would be over a period of time, particularly during construction phase.
Senator Black: Thank you very much for this tremendous and very instructive presentation. I found it very helpful. Arising from Senator Patterson's excellent questions, I have a specific question that I want to understand. If Imperial and their partners were to move ahead with an LNG project, would the Mackenzie Valley pipeline still be required?
Mr. Vician: Senator, I would totally hope so. This today is the most opportune element of the project that we have seen in a number of years. With the significant supply of natural gas into the North American market as a result of unconventional drilling and the addition of new technologies through hydraulic fracturing, we have changed the dynamics of the energy supply mix. Today, really, the opportunity exists in the export market, dealing with liquid natural gas, going to tidewater in Canada, being exported to other markets, in Asia and elsewhere, that would provide for a marketplace for our gas.
Our government has stated repeatedly, Premier McLeod and Minister Ramsay, that our greatest challenge today isn't the fact that we have gas and isn't the fact that we have a way to manage the delivery of the gas, but it is the issue that we don't have a delivery mechanism to the marketplace that is demanding the gas. We rely on our colleagues — our sister provinces and the federal government — to assist in that issue of having gas get to marketplace. It is the most important issue today.
LNG becomes the most viable opportunity for us to pursue. We are very encouraged by the joint venture partners in pursuing this. Again, there are many other projects in Canada that would have a direct relation to how this works.
Senator Black: Just so I understand, given that we all agree that the market for your gas would be international markets and the LNG project would be developed, I would presume, close to an ability to access those markets, i.e. the coast, I'm just wondering, other than perhaps some collector pipelines, why a main line to Alberta would still be required from the proponents' point of view? Is that a possibility?
Mr. Vician: I have not heard a specific line change proposal.
Senator Black: Okay, thank you.
Mr. Vician: As we know —
Senator Black: I'm with you. I hope you are right. Thank you very much.
Mr. Vician: Thank you.
The Chair: Thank you. That ends the questions.
Mr. Vician, thank you very much for appearing this morning. Enjoy the cold. Just so you know, my wife called me this morning and told me it is about the same temperature where I come from. Anyhow, thank you for enlightening us this morning. We appreciate it very much.
Mr. Vician: Thank you, Senator Neufeld. Thank you, senators. Appreciate it. Good morning.
(The committee adjourned.)