Thank you, Mr. Chairman, good afternoon, ladies and gentlemen, and bonjour, mesdames et monsieurs.
I appreciate the opportunity to appear before you this afternoon. The clerk has circulated a handout that I hope all of you have in your possession. I'm just going to go through that quickly; I'm not going to go through it in detail.
This afternoon I'll provide you with a high-level overview of the Mackenzie gas project, and then I'll focus on the Aboriginal Pipeline Group and the role we're playing in making this important project a reality.
The Mackenzie gas project accesses the closest frontier natural gas basin in North America. There are 6 trillion cubic feet of onshore natural gas reserves, and onshore these days is important. The project, as it stands, does not access offshore resources. It will have an initial capacity of 1.2 billion cubic feet per day, expandable to 1.8 billion cubic feet a day through the addition of compressor units. The total project cost is $16.2 billion. The Aboriginal Pipeline Group is a partner in the natural gas pipeline portion of the project only, and that amounts to $7.8 billion.
The original proposal to develop the Mackenzie Delta Basin dates back to the early 1970s. Public hearings were held under Justice Berger, and I understand he is going to be joining us this afternoon. The aboriginal groups at that time were unanimously opposed to the construction of the pipeline. The main reason behind this was that there were no land claims in place at that time.
In 1977 Justice Berger declared a 10-year moratorium on development. The aboriginal communities were simply not ready to capture the benefits that would have been available to them from a project of this magnitude. That decision was quite controversial at the time, but history has shown it to be a wise decision indeed.
During the 1980s and 1990s, three of the four aboriginal groups along the pipeline right-of-way settled their land claims. In January of 2000, before an application to build this pipeline had been filed, the aboriginal leaders of the Mackenzie Valley got together and reached agreement on a vision, and that was to maximize aboriginal ownership and benefits from a Mackenzie Valley pipeline. The Aboriginal Pipeline Group is the result of that vision. Today the project has strong aboriginal alignment and support all along its right-of-way. The Berger era is over.
APG is a unique alignment of the aboriginal groups in the Mackenzie Valley, not only to support the construction of the pipeline but to be a part of it. APG is a business deal negotiated by aboriginal people for aboriginal people. Our mandate is to maximize the long-term financial return to the aboriginal groups of the Northwest Territories through ownership in the pipeline. We've negotiated the right to secure a one-third interest in this pipeline. Our shareholders are the Gwich’in Tribal Council, the Inuvialuit Regional Corporation, and the Sahtu Pipeline Trust.
I'll introduce our board at the end of this presentation.
As for ownership of the Mackenzie gas project, Imperial Oil is the largest partner, at 34%; APG is the second largest partner, at one-third, or 33%; and then ConocoPhillips Canada, Shell Canada, and Exxon Mobil Canada make up the balance.
As a full partner, we have a seat on the board of the Mackenzie gas project. We participate in all committees and subcommittees, and in this way we have a direct voice in how this major project will be developed. We bring the concerns from the communities right to the board table.
The next slide in the package outlines the regulatory timeline. I won't go through it in detail, other than to say that the application was originally filed in October 2004. Public hearings commenced in January 2006. The NEB sat adjourned for three years, waiting for the joint review panel to produce their report, which they did last December. The NEB is moving toward a decision this fall. APG will continue to support the regulatory process through to the NEB decision. We're in the final stages of restructuring the project to make it a true basin-opening pipeline that will attract incremental shippers and have attractive tolls and tariffs. After that we'll begin detailed engineering, finalize the route alignment, and then there is the small matter of obtaining 7,000 local permits from the local land and water boards.
The next slide shows the timeline. All I'll say on that is if we get a decision this fall, construction will commence in the fall of 2016 and it will take place over three winter seasons. This pipeline will be built 100% in the wintertime, because the tundra cannot support heavy equipment during the summer months and you create less environmental impact during winter construction. We'll see the first gas flow in 2018.
There are very significant benefits to the Mackenzie Valley through the implementation of this project. First of all, there's a socio-economic impact fund of $500 million that has been negotiated by the aboriginal groups with the federal government. There's $1 billion in set-aside work for corridor groups. That's work under the access and benefits agreements that has been guaranteed to go to local contractors.
There are business and employment opportunities in the Northwest Territories for 7,000 jobs during construction and over 100,000 jobs across Canada, with approximately 150 permanent full-time positions. This project is not only good for the north, it's good for Canada as a whole.
This slide shows the gross domestic product benefits of over $100 billion and tax and royalty revenue of over $10 billion to the various governments.
The final slide shows our board of directors. I'm proud to report to a board of directors who are all aboriginal. They're a fantastic group of people to work for.
Thank you very much.