Oil Sands Truth: Shut Down the Tar Sands

Canada Vs. Nunavut for Oil & Gas in the Arctic?

December 22, 2006
Okalik: Devolution must include internal waters

“It is, frankly, an area where, for the moment, we agree to disagree.”



Ottawa-Nunavut devolution talks hit a snag last week when Nunavut
Premier Paul Okalik and Indian Affairs Minister Jim Prentice came out
with opposing views on jurisdiction over the vast oil and gas reserves
lying within Nunavut’s internal waters.

Prentice said last week in an interview broadcast on CPAC, the Canadian
parliamentary channel, that his recently-appointed devolution
negotiator, Paul Mayer, is not mandated to talk about resources within
the “offshore seabed.”

Okalik, on the other hand, says legal and historical precedents demand
that Nunavut get jurisdiction over its internal waters and that Ottawa’s
current position amounts to Nunavut being “treated like an offshore
colony rather than an equal member of Confederation.”

But so far, both sides appear willing to keep talking, and their cordial
relationship seems unshaken by the dispute.

“It is, frankly, an area where for the moment we agree to disagree,”
Prentice said.

The stakes, however, could not be higher. Although land-based mineral
production in Nunavut is expected to contribute jobs, investment and
some resource royalties, the value of mining in Nunavut is dwarfed by
the potential wealth that resides below the surface of Arctic islands
and Arctic seabeds.

The largest known fossil fuel reserves lie in a remote area called the
Sverdrup Basin, west of Axel Heiberg Island.

Ken Drummond, a Calgary energy industry consultant, estimates that the
Sverdrup Basin contains a recoverable natural gas resource of 17.4
trillion cubic feet, and 334 million barrels of oil.

Okalik said the cash value of this resource - some of which is
accessible from islands and some of which lies under the sea - is
estimated at a trillion dollars.

And that doesn’t include the value of other known natural gas and oil
reserves in Lancaster Sound and Baffin Bay-Davis Strait. One natural gas
field off Baffin Island is believed to hold 2.3 trillion cubic feet.

After extensive exploration in the 1960s, 1970s and early 1980s, the
industry stayed away from Nunavut because of a long period of low world
energy prices and the high cost of working in the High Arctic.

The only fossil fuel production ever done in Nunavut was at Bent Horn in
the High Arctic, where a small operation between 1985 and 1996 produced
2.8 million barrels of oil, which was shipped out every summer on the
M.V. Arctic.

But in a generation or two, when the world runs out of cheap, easily
accessible oil and natural gas, it’s likely that energy prices will rise
to a point where industry will want to extract Nunavut’s expensive
fossil fuel reserves.

Okalik raised the issue of who should control and benefit from this
wealth on Dec. 13, in an opinion piece published in the Ottawa Citizen,
and in a speech before the Public Policy Forum, an Ottawa think-tank.
Premier Paul Okalik asserts Nunavut’s right to benefit from natural gas
and oil production in an interview last week on CPAC. (VIDEO CAPTURE)

Okalik said Canada’s internal waters in the High Arctic are also
Nunavut’s internal waters. That, he said, is because of a decision that
Brian Mulroney’s Conservative government made in 1986.

Responding to threats against Canada’s sovereignty in the Arctic,
Mulroney drew Canada’s maritime borders around the Arctic Archipelago,
and declared all waters inside that line to be internal Canadian waters.

And the Mulroney government used Inuit use and occupancy studies to
defend Canada’s right to those internal waters, Okalik said.

But officials who serve the current Conservative government do not
recognize these boundaries, Okalik said, and are trying to say that
Nunavut’s boundary ends at the shoreline.

Okalik said this position contradicts a Supreme Court of Canada ruling
that distinguished between “internal” waters, which belong to the
province, and “offshore” waters, which belong to the federal government.

And Canada threatens to create a confusing dual-management regime for
the oil and gas industry: “an administrative nightmare” that would
create a 140-thousand-kilometre boundary between Nunavut’s jurisdiction
and Canada’s.

“It’s hypocritical and unjust as well as being impractical and hostile
to business,” Okalik said.

For his part, Prentice said that the two sides are divided on only one
issue, and have plenty of others to talk about.

“There are a large number of issues that need to be discussed,
everything from food mail to educational programs to resource revenue
sharing, the whole range of issues that separate Nunavut from the powers
that a full province has,” Prentice said.

In an interview with CPAC that was also broadcast Dec. 13, Okalik took a
more conciliatory tone than in his speech to the Public Policy Forum
earlier that day, saying that by asserting Nunavut’s interests, he is
also asserting Canada’s interests.

“I’m there to support our national government in asserting sovereignty
in these waters and that’s what I’m trying to do is offer our support
and strengthen our case in the international community,” Okalik said.

But he said it’s crucial for Nunavut to gain access to resource revenues
from oil and natural gas development in its internal waters.

“I’d love to see the day when we can run our own programs and not have
to run to Ottawa every year and ask for more money so that we can
provide programs that are comparable to the rest of the country,” he said.

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