Thank you, Mr. Chairman.
Good morning, ladies and gentlemen.
I want to thank you for the opportunity to provide you with an update on the Mackenzie Valley gas pipeline and the important role that the Aboriginal Pipeline Group is playing in the development of this very important piece of northern infrastructure.
Just 40 short years ago, the trapping industry provided northern aboriginal people with their own economic base. They were an industrious, independent, and self-sufficient people. Unfortunately, the trapping economy did not survive. As a result, northern aboriginals were forced to move off the land and depend on a cash economy, and many became dependent on government and the social welfare system.
Today our shareholders and those they represent are looking for a way to become self-sufficient once again. We see the Mackenzie gas pipeline and the associated exploration and development activities as a way to provide that economic base for the people of the Mackenzie Valley.
Back in January of 2000, aboriginal leaders met in Fort Liard in the southern Northwest Territories. At this meeting a decision was made that if there were going to be a pipeline built on their land, they would work to obtain an ownership position in that pipeline in order to maximize the benefits to their people. This led to discussions with Imperial Oil, ConocoPhillips, Shell, and Exxon Mobil, culminating in a memorandum of understanding in June of 2001 that gave us a one-third ownership position in the Mackenzie Valley pipeline.
By June 2004 the Inuvialuit, the Gwich'in, and the Sahtu formally became Aboriginal Pipeline Group shareholders. APG is a business deal negotiated by aboriginal people for aboriginal people, one that will benefit the northern aboriginal people for generations to come. Our mandate is to maximize the long-term financial return to the aboriginal groups of the Northwest Territories through ownership in the pipeline.
Through APG, aboriginal people have had and are having today a direct voice in the decision-making for this significant project. The Mackenzie gas project consists of four main infrastructure components. First, there's a gathering system north of Inuvik that gathers the gas from the three gas fields. There's a facility known as the Inuvik area facility, which will remove the natural gas liquids from the gas streams. Third, there's a 1,200-kilometre, 30-inch-diameter gas pipeline from Inuvik southward to Alberta. And finally, there's a 10-inch liquids line that will carry the natural gas liquids to Norman Wells, where it will interconnect with the existing Enbridge oil line. The project has an initial capacity of 1.2 billion cubic feet a day, which is expandable to 1.8 billion cubic feet a day by adding compressor stations along the route.
Last December the National Energy Board issued its supply-and-demand forecast, which concluded that gas from the Mackenzie Delta will be needed by about the year 2020. That's largely due to a decline in production from conventional resources in North America, combined with the increased demand for this environmentally preferable fuel.
Mackenzie is a non-controversial project that is ready to move forward now. The regulatory process is complete and an NEB certificate has been issued. There's widespread alignment for the pipeline, including strong aboriginal support. As you'll see in a few moments, there are huge economic and environmental benefits, not just for the north but for Canada as a whole.
The Mackenzie gas project is the only answer for a sustainable economic future for the Mackenzie Valley. Without a pipeline to bring their products south to markets, investment by the oil and gas firms in the north will be limited. In the past, this industry has provided contracting and employment for the people throughout the Mackenzie Valley and the Beaufort Sea region. Once the MGP is on a path to being constructed, a new basin will open up for exploration, ensuring employment and work for northerners for many years to come.
The Mackenzie gas project has guaranteed $1 billion in set-aside work for aboriginal contractors along the pipeline. This was negotiated as part of the access and benefits agreements. This is a huge opportunity for northern companies to build capacity and compete on an equal footing with southern companies.
During construction over 7,000 jobs will be available in the Northwest Territories and over 140,000 will be broadly spread across Canada. That's to provide the goods and services needed for the pipeline and associated facilities. This equates to some 30,000 person-years of employment in the Northwest Territories and over 200,000 across Canada.
The project is not only good for the north, it's good for Canada as a whole. We will provide a positive GDP impact of over $100 billion, with royalty and tax revenue of over $10 billion to federal, provincial, and territorial governments, and our project supports Canada's course in the reduction of greenhouse gas emissions by displacing coal and oil in the power generation market. Natural gas produces one-third fewer emissions than oil and fully one-half that of coal. The power generation market is the fastest-growing market segment for natural gas, with a 40% forecast for growth by the year 2020. If used to replace coal and oil for power generation, the Mackenzie project could lead to a 600-megatonne reduction in greenhouse gas emissions.
We need to move forward with this project now. However, for this project to proceed toward construction, we need to finalize a fiscal framework with the federal government that will provide an appropriate balance of benefit and risk for both the project and the federal government. That will allow us to recommence the detailed engineering field activities and site-specific permitting necessary to meet the NEB requirement to commence construction no later than December of 2015. With four winter seasons of construction, gas could start flowing by the year 2019.
Northerners and northern businesses have been waiting too long for this project. Unfortunately, we're now about ten years behind our original in-service date of 2009. We cannot fail them now. This project will give the youth in the Northwest Territories employment and career certainty within their homeland, something that has not been available for generations.
We've endured a very lengthy six-year regulatory process. We simply can't afford more delays. We must conclude the fiscal discussions with the government in the first quarter of this year. That's to begin the developmental work, the engineering work, and so on, to allow construction to commence before that NEB certificate expires. We are optimistic that we will come to an agreement to enable this nation-building project to become a reality.
So there you have it. We have an all-Canadian project, with full regulatory approval ready to proceed, ready to create jobs—7,000 of them during construction and over 140,000 across Canada—ready to reduce the deficit by contributing $10 billion in direct tax and royalty benefits, ready to support Canada's clean energy initiative, a 600-megatonne reduction in greenhouse gases over the life of the project, and ready to address Arctic sovereignty. Nothing says it better than real infrastructure in the north, and of course the project is ready to open a new basin to resource development to meet Canada's future energy needs.
All of this is with not just aboriginal support, but with aboriginal ownership. We see APG as a good model for harmonious aboriginal participation in our major projects. This project demonstrates that it is possible not only to work with industry, but at the same time guarantee protection of aboriginal culture and our environment. The Mackenzie gas project is truly a nation-building project, delivering clean energy we need in an environmentally responsible manner, and creating jobs and economic benefits for all of Canada. APG is proud to be a part of it.
Thank you.