Indigenous and Northern Affairs Committee on June 1st, 2010

[Stephen Quin]

I think the process has been established in the Yukon. I'm not saying the Yukon is perfect, but the Yukon has a workable process that is devolved to the territory, and it is much more functional and practical and reasonable and timely than that of either of the two northern territories. So the model is there. It doesn't mean the federal government is out of the process. DFO still gets to comment, and Natural Resources Canada, and so on. They're still part of the process but they don't drive the process, and you don't get the hang-up of things having to go back to Ottawa for approval on a regular basis.

I see the system in the north, in the other two territories, as quite paternalistic. It's “We don't believe you have the capability to manage it, so yes, we'll let you make the decision, but hey, we get a second shot at every decision.” I think that's proven in the Northwest Territories--Nunavut doesn't work--and it's been proven the opposite does work in the Yukon.

So I think there's a model there to go forward on, and I think it should be acceptable to the government to devolve that responsibility to the people who own the land and live there.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

My question is as much for Mr. Quin as Mr. Reid.

Would you go as far as to suggest that, if there are environmental assessments, an agency should be set up in the north? An agency that would be much more attuned to the needs of the people living there, instead of going back and forth with Ottawa, the Yukon and the other territories?

[Stephen Quin]

That, essentially, is what happens now. Yes, the Yukon runs the entire process, and NIRB and Mackenzie Valley run the processes locally. The challenge is not that. The challenge is where decisions have to go back to Ottawa for approval at every step of the way--which type of process, moving onto the next stage, the recommendation, the decision documents. They go back to Ottawa at every stage. And because the minister is at risk for his decision, Ottawa ends up having to run a second, parallel process before the minister feels comfortable signing off on his decision, even though it's his department that made the decision up in the north anyway. It's that parallelism and loop-back to Ottawa for decisions all the time.

So step back and do it like the Yukon does.

[The Chair, Conservative, Bruce Stanton]

Mr. Reid.

[Robert Reid]

I would agree with Mr. Quin in part. In the Mackenzie Valley the review process by both the joint review panel and by the National Energy Board was done very much on a local basis to accommodate local input. The decisions were actually made in the north. The problem in the case of the Mackenzie Valley was that the joint review panel didn't have the capability or the administrative controls to get the job done in a timely manner.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

Do you see the creation of CanNor as a solution to some of the problems in your day-to-day operations?

[Robert Reid]

I would say I'm optimistic. The Northern Projects Management Office has been set up under CanNor to help to streamline the regulatory process and industry's understanding of that process to achieve timely results.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

What do you think, Mr. Quin?

[Stephen Quin]

I remain skeptical. I saw the introduction of the major projects management office and it has helped a bit. But the solution to a problem is to set up more bodies to create more bureaucracy, rather than stepping back and looking at what is the underlying cause of the problem. I keep saying it, but go to the Yukon model. It's a complete devolution of the process, and therefore you don't need CanNor or major project management. They have no jurisdiction in Yukon because they have a devolved process, so you don't need all of that additional bureaucracy.

[The Chair, Conservative, Bruce Stanton]

Thank you, Mr. Lemay. And thank you to our witnesses. It is now over to Mr. Bevington for seven minutes.

Mr. Bevington, you have the floor.

[Dennis Bevington, NDP, Western Arctic, NT]

Thanks, Mr. Chair.

My thanks to Mr. Reid, and of course to Mr. Berger, who is an icon in northern climes. Mr. Quin, I'm pleased to see you here as well.

The pipeline has been delayed a bit in decision-making. Right now in the Northwest Territories, in the Mackenzie Valley, the expectations are not being met for development opportunities. We're looking at other infrastructure development to fill the gap in the next few years. The Mackenzie Valley Highway is front and centre with most people.

How do you see the Mackenzie Valley Highway? If it was constructed prior to a pipeline, would that assist you in reducing the pipeline's $16 billion cost?

[Robert Reid]

Logistics in the north are difficult. There is no highway or transportation corridor anywhere near the pipeline right-of-way, other than the Mackenzie River. So the Mackenzie River effectively becomes the highway. This makes logistics difficult. Material is shipped to Hay River by rail, moved to barges, and then transported by barge down the Mackenzie River during the summer months to staging areas. During the winter months, material is picked up from those staging areas and moved to the right-of-way. All of this increases costs. If there were a Mackenzie Valley Highway in place prior to the pipeline, the costs would be lower.

[Dennis Bevington, NDP, Western Arctic, NT]

Are there any studies that could show us how much difference that would make?

[Robert Reid]

At this point, there are conflicting studies, Mr. Bevington, and that's part of the problem.

[Dennis Bevington, NDP, Western Arctic, NT]

Okay, we'll leave that for now.

You said the pipeline is on tundra. What percentage? A big part of what you're saying is that you have to build only in the winter. What percentage of the pipeline route is actually on tundra?

[Robert Reid]

I don't have a statistic handy, but in general, I can tell you that even in northern Ontario or northern Alberta, pipelines are constructed during the winter months; your water courses are frozen, your ground is frozen, and your environmental impact is far lower in the winter. I don't have a precise figure for how much is on tundra.

[Dennis Bevington, NDP, Western Arctic, NT]

In conversations I've had with TransCanada Pipelines, they indicated to me that one of the new pipeline scenarios they are looking at is building 12 months of the year. You build the pipeline where you can build it in the summer and then build the pieces that you have to build in the winter, in the winter. You have smaller crews and a lower impact on a lot of different things by having a year-round pipeline development process. That's for northern B.C. How far from that would we be in the Mackenzie Valley?

[Robert Reid]

That's linked to your previous question, actually, on the highway.

The Alaska Highway pipeline, for example, has a highway paralleling the pipeline for the entire length. You can do exactly what you've said, and that is build the summer construction segments in the summer and the winter construction segments in the winter--construction for 12 months of the year. The problem with Mackenzie is that you can't access those sections that might be constructed in the summertime. You can't access them during the summer. That's the issue. A highway would resolve that issue.

[Dennis Bevington, NDP, Western Arctic, NT]

You talked about the $10 billion in tax revenues to federal, provincial, and territorial governments over the six trillion cubic feet of natural gas that's now proven. What percentage of that $10 billion actually accrues to the territorial government under the existing equalization formula, under the existing share of royalties for the Northwest Territories government?

[Robert Reid]

I don't have that number at my fingertips, but it's one I can certainly get for you. It's not a large number.

[Dennis Bevington, NDP, Western Arctic, NT]

It's less than a billion dollars over the lifetime of the pipeline, isn't it?

[Robert Reid]

It's not a large number, that's right.

[Dennis Bevington, NDP, Western Arctic, NT]

When you go into development in a territory like ours, the Northwest Territories, there are many costs accrued that need to be covered by increased royalties to governments in order to pay for roads, schools, hospitals, and airstrips. There's a whole gamut of what's required when you add value to your GDP. Is that not the case?

[Robert Reid]

Yes, that's correct.

[Dennis Bevington, NDP, Western Arctic, NT]

So we have a situation right now, with this pipeline, where most of the benefits are going to accrue to the federal government and the costs are going to remain, over the lifetime of the pipeline, with the Government of the Northwest Territories. Is that correct?