Thank you, Mr. Kreps.
Good afternoon, Madam Chair and honourable committee members.
The Inuvialuit settlement region of the western Arctic is very rich in natural resources and is one of the largest untapped oil and gas reserves in the world, as is well understood by the many decades of drilling and investigation that have occurred, yet the region pays some of the highest energy costs in Canada for both household and commercial users. It is not uncommon to see a monthly heating utility bill of well over $1,000 per month, per household. One community, Inuvik, has benefited from 25 years plus of local gas production to manage energy costs somewhat, but even that resource is now at end-of-life, and all energy needed for the Inuvialuit settlement region is now imported from southern Canada or internationally.
Fortunately, the Inuvialuit energy security project is under construction and looking to begin operations in the next couple of years. It has been a long road for the project with significant risk, led solely by the Inuvialuit, who are fortunate and visionary in their approach to regional development. By the time the IESP is operational, it will be over a decade of development and effort since inception.
The IESP—or Inuvialuit energy security project—went through several years of local studies and four years of environmental screening and Canada Energy Regulator review, finally achieving full permits to construct and operate in the first quarter of 2024. This will be a one-of-a-kind project where an indigenous proponent will own the subsurface mineral rights, the surface lands and the facilities and be the largest customer. Consultation began early in 2018, is ongoing and will continue throughout the life of the project, making sure that local concerns are adaptively managed as the IESP progresses through its various life stages.
The project involves the construction of a gas plant that will produce natural gas and synthetic fuels, which can then be transported to local customers for power, heating and transportation applications. The IESP will reduce reliance on expensive southern fuel and exposure to intermittent access. Based on the estimated reserves of the IESP resource, the project will be able to operate for 50 years plus as currently designed.
The IESP will create opportunities for local beneficiaries and mitigate the cost of living and doing business in the Inuvialuit settlement region for generations to come. The IESP has already performed over $50 million in local Inuvialuit business contracts and employs many local people and Inuvialuit beneficiaries. The project provides huge environmental benefits by reducing greenhouse gas emissions and eliminating long-distance hydrocarbon supply chains, greatly reducing the risk of hydrocarbon spills across northern Canada and our waterways.
As mentioned, the Inuvialuit have led and have spent significant risked dollars to develop a critical infrastructure project for the western Arctic. The Inuvialuit Regional Corporation continues to work with many federal departments on advertising the many benefits the IESP provides to the north and Canada, but it is still seeking clarity from several federal departments and, ultimately, further government support. The IESP aligns very well with Department of National Defence Arctic initiatives as well as the potential for major projects across the north.
Permitting is mostly in the rear-view mirror at this point, but looking forward, reducing the capital burden and cost of capital on Inuvialuit is a key priority of the project and the Inuvialuit Regional Corporation. The end price of the product is driven by the infrastructure cost to build and operate and not by typical commodity markets. This is a stranded untapped resource, and the greatest economic opportunity for the project comes by reducing the Inuvialuit financial risk to build and operate.
We thank you for your time and the opportunity to speak today, and we look forward to the questions.