Mr. Speaker, it is my pleasure today to speak on Bill C-25. Although this bill represents only a minor change to the Norman Wells oilfield, it is a change of no small consequence.
The purpose of this bill is to exclude the Norman Wells Amending Agreement about to be signed from the application of the Canada Petroleum Resources Act. In order to understand the reason for this amendment, it is necessary to go back and examine the history of this oil well. It was discovered in 1919 and drilling operations began in 1920.
The site's distance from markets and the economic crisis of the 1930's were unfavourable to the development of the early wells. Extraction and refining were limited to meeting local needs. World War II led to renewed exploration and the construction of a pipeline to Whitehorse. The end of the war in 1945 brought a halt to operations, which had grown from 100 barrels a day in 1940 to a production ranging from 1,500 to 25,800 barrels daily.
In 1944, the government of Canada signed an agreement with Imperial Oil to ensure the development of the Norman Wells field. In 1966, over 2,000 barrels of oil were being produced daily, primarily for shipment to locations in the Mackenzie Valley, the Arctic coast and DEW line radar stations.
In 1974, with 54 producing wells, production was 2,738 barrels of oil daily and 4.9 million cubic feet of gas. In 1981, Cabinet allowed Esso Canada to increase its production to 25,000 barrels of crude, which were sent by pipeline to Zama in Alberta.
Since then, more than 200 injection and producing wells have made Norman Wells the fourth largest producing oil field in Canada. The first delivery to the south took place in April 1985 through a 868 kilometer pipeline, 65 years after the discovery of the field.
The 1944 agreement gave exclusive drilling and mineral prospecting rights and privileges for three 21-year periods. The agreement also established the boundaries of the oil field. As I said earlier, the agreement expires in the year 2008.
The Canadian government holds an interest in the project equivalent to a third of the value of production, less a third of all production and development costs, as well as management costs. Esso also undertook to pay five per cent in annual royalties on the other two thirds of its production.
In 1992, production rose to 12.1 million barrels of oil, representing profits of 50 million for the government. The drilling program undertaken in 1984 and new technologies have made it possible to drill horizontal wells, and at the same time to produce the oil located at the boundaries of the field economically.
The new technologies have also revealed that it would be possible to work this field until the year 2020 if its boundaries were extended.
The National Energy Board has approved the expansion of the field to include the outlying area for the purpose of oil recovery in that area. This is when the Canada Petroleum Resources Act comes into play. This act provides for submissions to be made regarding issuance of production interests.
In view of the fact that the outlying area is of no use to other producers, especially considering the associated costs, it be-
comes necessary to amend the act to allow the extraction of petroleum in that area not covered by the 1944 agreement.
It is important to consider at this point how other stakeholders might view this expansion of the Norman Wells oil field.
The Canadian Association of Petroleum Producers declared itself in agreement with the proposed change to Norman Wells boundaries because of the very special circumstances of the case. However, the Association indicated this change was not to be construed as a precedent with regard to future issuance of interests.
As for the native people, they have given their consent to the project in March 1994 on one condition: that the bill respecting the Dene and Métis land claims settlement come into force before the petroleum resources legislation be amended.
This condition was met and the Bloc Quebecois is quite pleased that the government respected the wishes of the natives peoples on this issue. Such a departure from its old ways reflects a new course that should be maintained in the future.
Exploring the new area covered in the Norman Wells Amending Agreement to be signed in 1994 seems, on the face of it, like it could benefit all the communities involved. For one thing, it will allow Imperial to invest over $30 million in a development program, $10 million of which will be spent directly in that northern area. In addition, 65 direct jobs will be created, 40 of these for northeners, as well as many indirect jobs in the service industry and other areas.
The development project includes a $6 million contract for drilling equipment. The drilling contract was awarded to a profit-sharing company owned by the Dene and Métis and Imperial. As new technologies will be developed regarding horizontal wells, this company will acquire the necessary expertise to participate in other drilling jobs. You are also looking at some long term investments, particularly in the use of enhanced oil recovery technologies.
We are talking about investments of up to $100 million, depending on the exploratory period in that particular oil field. This bill appears to accommodate both the oil industry and the native communities that depend on it for their livelihood. It is also important that the federal petroleum resources legislation remain strong with regard to the future issuance of operating interests. As the Official Opposition critic for natural resources, and after discussion with my colleagues, I will not vote against this bill and I do hope it will pay the dividends it seems to be promising.