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Nunavut sees devolution light after long Arctic winter

Nunavut sees devolution light after long Arctic winter

Yadullah Hussain | Jul 20, 2012
Financial Post

Nunavut would like nothing more than be the master of its own destiny and has begun negotiations with the federal government to transfer land rights and royalties as it seeks to explore its fossil fuel riches, says Peter Taptuna, Nunavut’s Minister of Economic Development and Transportation. Excerpts from the interview:

Q The Arctic has become a focus area for many jurisdictions. Has Nunavut also noticed a surge in interest in its petroleum resources?
A To a degree, yes, in terms of longer term prospects opening up, there is a growing awareness on the part of industry. Bear in mind that bids are preceded by a ‘call for nominations’ over large areas, and for Nunavut only the Sverdrup Basin (High Arctic Islands) has been subject to such a call in recent years. Presently this task is managed by the federal government.

There is some recent interest in lands along the southern reaches of the Sverdrup Basin, and in the next few years we may see renewed exploration occurring there. Also, based on the exploratory drilling that has been going on in West Greenland waters, there is considerable interest in seeing the Canadian side of Baffin Bay opened up for licensing. The federal government has started the process of research needed prior to any licensing, so that we could see a call for nominations there within a few years. The Baffin Bay and Davis Strait offshore are fully federal jurisdiction, although Nunavut would be strongly implicated in any development that could occur there, well into the future.

Q What’s the scope of oil and gas reserves in Nunavut?
A Most experts believe that some 20-25% of Canada’s conventional oil and gas potential occur in Nunavut.

Most of this potential (both already discovered, and undiscovered) lies in the high Arctic Archipelago, known geologically as the Sverdrup Basin. In the Sverdrup Basin there are 19 fields historically discovered that are still held by companies as Significant Discovery Licenses. The best estimates of discovered resources are in the range of 500-million to 1,800 million barrels of oil, and 17 to 27 trillion cubic feet of gas.

In the eastern Arctic, offshore of Baffin Island, that is Baffin Bay and Davis Strait, resource estimates place the oil potential commonly in the range of some 10-30 billion barrels of oil, and perhaps some tens or a hundred tcf of natural gas. This is for the entire offshore area, so about half in Canada, half in Greenland, and is also quite speculative at this point, with so little exploration conducted. Farther south, towards the Labrador Sea, there is a historic significant petroleum discovery field with a best estimate of discovered resources of 2-4 tcf of gas.

At present there is no active exploration ongoing in these areas, though we remain optimistic that part of the Sverdrup Basin will be considered in the next few years, and that we may see exploration in the eastern offshore perhaps within this decade.

Q You recently stated that Nunavut would like more say in oil and gas activities in the territory and collect royalties. What changes would you bring to attract companies?
A Historically in Canada’s three northern territories, natural resources have been owned and managed by the federal government. Gradually, the ownership is and has been transferred to the territories: Yukon ten years ago, and NWT currently in negotiations. Most recently, the federal government and we have appointed negotiators to begin the same process in Nunavut. This will take a number of years to complete, but finally we have a beginning. Through this process, we will become owners of the resources, with the right to set management practices and collect royalties.

With a lengthy negotiation process only just beginning, it is premature to speculate on any regime changes we might consider. However, we do recognize that it takes a long time to move from petroleum exploration to development, sometimes decades. We also recognize that industry is averse to rule changes, and we would want exploration to continue while we conduct our ownership negotiations. So we would not contemplate any major changes from the current management regime during that time.
Most experts believe that some 20-25% of Canada’s conventional oil and gas potential occur in Nunavut.

Q What more would you like to see from federal government in terms of investment and road and facilities infrastructure?
A Nunavut requires investment in roads, for example the Manitoba to Nunavut Road, which could also include a power line connecting to the Manitoba power grid, and a fibre optic internet link to Manitoba.

Nunavut needs marine infrastructure in all communities and we have prioritized the seven communities we want to see developed first.

Nunavut is totally dependent on diesel generated power today, we need investment into hydro generated power and any other effective alternative sources of power.

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