Mr. Speaker, I am pleased to speak to this bill today, the first bill that I will be able to speak to in my new capacity as Reform Party critic for oil and gas within the Department of Natural Resources.
Bill C-25 addresses an issue in an area of Canada I am quite familiar with, having been involved in the drilling of several wildcat wells in the Norman Wells field fringe area. Bill C-25 contains a minor amendment to the Canadian Petroleum Resources Act in order to exempt the Norman Wells amending agreement which will now be expanded to include the additional lands which are under the jurisdiction of that act.
Although this bill deals with a minor wording change it is important that this bill pass in order to exclude the Norman Wells agreement from the Canadian Petroleum Resources Act so the governor in council can proceed with its action to extend the boundaries.
At the risk of being repetitive I would like to talk briefly about the history of this oil field, discuss the necessity for this bill and talk about the positive actions the governor in council will be taking to extend the life of this field.
There is a long history leading up to this current amendment. The first oil well was drilled in Norman Wells in 1920. Since then it has grown to be the fourth largest producing field in the country. In 1944 Imperial Oil and Canada signed the Norman Wells proven area agreement which included just under 3,300 hectares within its boundaries.
When the Canadian Petroleum Resources Act came into force the Norman Wells proven area already covered by legislation was exempted from the new act. Because of this bill before us today subsequent renewals and expansions will be similarly exempted.
Since the boundaries of the Norman Wells field will be changing to include areas of new production some exemption from the Canadian Petroleum Resources Act is necessary.
It is important to note that the original Norman Wells agreement was signed before the Canadian Petroleum Resources Act came into effect. The new land that will be included in the boundary change to the Norman Wells field is the land that would normally come under the Canadian Petroleum Resources Act. This means that without an amendment exploration and production licences on these new lands would have to go to an open bidding process. This amendment is necessary to provide security of tenure for Imperial Oil and allow for the renewed investment and enhanced recovery techniques in this production field.
This amendment will also provide for one-third ownership in the production of these new areas for Canada.
In addition to the expansion of the field this amendment allows for another initiative to take place to extend the life of this field. This is the decision by the governor in council to extend the licence of Imperial Oil on the Norman Wells field to the year 2020.
There have been advances in industry extraction techniques. Imperial Oil in the Norman Wells field has pioneered and perfected much of this new technology. It was here at Norman Wells, because much of these reserves lay below the Mackenzie River, that directional and later horizontal drilling have been developed and are now used all over the world. The technology of building islands in a water body that freezes and thaws in the spring when the ice goes out was also developed here and later used in the Mackenzie Delta and the Beaufort Sea.
Other techniques of well workover for production enhancement such as water and gas flooding, formation fracturing and acidization have also been developed in good measure in this field. They have made Canada a world exporter of petroleum production technology. They have allowed us over the last 20 or 25 years to increase the recoverable reserves in Canada's conventional oil fields by up to 15 per cent, preventing the long predicted decline in conventional crude oil production.
Because of these advancements in technology they now believe that the Norman Wells field will be productive well beyond the original date. Therefore it is important that the governor in council proceed with extending this licence so that as much oil as possible can be extracted in a realistic timeframe.
With this bill allowing for the Norman Wells boundaries to be extended and the order in council decision to extend Imperial Oil's licence, Imperial Oil will be given the security of tenure it needs for long term planning and control of overhead costs. This will make this field economically viable for a much longer period.
It has been assured that there is time to realize a return on major investments in new technology. These investments are essential to maximizing the production from this field.
With the extension of the boundaries and licences, Imperial Oil will commence a $30 million drilling program. This drilling program will be undertaken mostly in the expanded proven area; more specifically, 12 new wells, four for water injection and eight for production, drilled along the field limits of the new boundaries. About one-third of the money, $10 million, will be spent directly in the north. Most of the remaining $20 million will be spent in my home province of Alberta.
I would hope this is an indication that this government realizes the importance of providing our resource based industries with predictability and stability in policy environment. If this government starts sending signals to the private sector that it is safe to make long term investment plans, it will lead to economic growth and the creation of far more permanent jobs than government can hope to achieve through any temporary government initiated make work projects.
This amendment is good for Imperial Oil because it provides a stable planning environment. It is good the Sahtu Dene and other local residents because they can rely on employment opportunities and a cash infusion into the local economy for many more years. It is good for the Canadian people because it will generate additional oil revenues and royalties.
From my perspective the only thing objectionable about this bill is that in spite of the fact that no party could or did object to this initiative, it has taken over two years to get this simple initiative through this cumbersome, unresponsive process.
Let me and my party affirm our support for this bill and encourage all other members of this House to do so as well.