AANR Committee Meeting

37th PARLIAMENT, 1st SESSION

Standing Committee on Aboriginal Affairs, Northern Development and Natural Resources

EVIDENCE

CONTENTS

Tuesday, April 16, 2002

Á

1105

The Chair (Mr. Raymond Bonin (Nickel Belt, Lib.))

Hon. Jim Antoine (Minister of Resources, Wildlife and Economic Development, Government of the Northwest Territories)

Á

1110

Á

1115

The Chair

Mr. David Chatters (Athabasca, Canadian Alliance)

Á

1120

Mr. Jim Antoine

Mr. David Chatters

Á

1125

Mr. Jim Antoine

Mr. David Chatters

The Chair

Ms. Nancy Karetak-Lindell (Nunavut, Lib.)

Mr. Jim Antoine

Á

1130

Ms. Nancy Karetak-Lindell

Mr. Jim Antoine

Á

1135

The Chair

Mr. Serge Cardin (Sherbrooke, BQ)

The Chair

Mr. Serge Cardin

The Chair

Mr. Serge Cardin

Mr. Jim Antoine

Á

1140

The Chair

Mr. Larry Bagnell (Yukon, Lib.)

Á

1145

Mr. Jim Antoine

Mr. Larry Bagnell

Mr. Jim Antoine

Á

1150

The Chair

Mr. David Chatters

Mr. Jim Antoine

Á

1155

Mr. David Chatters

The Chair

Mr. Jim Antoine

Â

1200

The Chair

Mr. John Finlay (Oxford, Lib.)

Mr. Jim Antoine

Mr. John Finlay

Mr. Jim Antoine

The Chair

Mr. David Chatters

Mr. Jim Antoine

Â

1205

The Chair

Mr. Jim Antoine

Mr. David Chatters

Mr. Jim Antoine

The Chair

Mr. Larry Bagnell

The Chair

Mr. Brian Kennedy (Government Relations Consultant, Government of the Northwest Territories)

Â

1210

Mr. Larry Bagnell

Mr. Brian Kennedy

Mr. Larry Bagnell

Mr. Brian Kennedy

Mr. Larry Bagnell

Mr. Brian Kennedy

Mr. Larry Bagnell

Mr. Jim Antoine

The Chair

Mr. John Godfrey (Don Valley West, Lib.)

Mr. Brian Kennedy

Mr. John Godfrey

Mr. Brian Kennedy

Â

1215

The Chair

Mr. Brian Kennedy

The Chair

Mr. David Chatters

The Chair

Mr. Jim Antoine

The Chair

Ms. Nancy Karetak-Lindell

The Chair

Ms. Nancy Karetak-Lindell

The Chair

Ms. Nancy Karetak-Lindell

Â

1220

The Chair

Ms. Nancy Karetak-Lindell

The Chair

Mr. David Chatters

The Chair

Mr. David Chatters

The Chair

Mr. Larry Bagnell

The Chair

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CANADA

Standing Committee on Aboriginal Affairs, Northern Development and Natural Resources

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NUMBER 048

l

1st SESSION

l

37th PARLIAMENT

---

EVIDENCE

Tuesday, April 16, 2002

[Recorded by Electronic Apparatus]

Á  (1105)  

[English]

    The Chair (Mr. Raymond Bonin (Nickel Belt, Lib.)): Pursuant to Standing Order 108(2), we are here respecting the Mackenzie Delta gas and pipeline.

    We are pleased to have with us representatives from the Northwest Territories, from the Department of Resources, Wildlife and Economic Development. We are honoured to have the Honourable Jim Antoine, the minister, and Mr. Cal Brackman, resource economist, who I've asked to make an appearance before the committee. This is a courtesy we extend to different levels of government.

    As everyone knows, most industries would like to meet with the aboriginal affairs, northern development and natural resources committee. If we would say yes to all of them, we would be in meetings every day, all day. But in your case, we expect that we should be in communications continually, and we're honoured to have you here with us.

    We'll ask you to make a presentation. This will be a very casual meeting. We want you to feel comfortable. The more time you take, the less time we have for questions. I know my colleagues on the committee always have very good questions, very constructive questions. So take the time you need, and then we'll proceed to the question and answer period.

    The floor is yours.

    Hon. Jim Antoine (Minister of Resources, Wildlife and Economic Development, Government of the Northwest Territories): Thank you, Mr. Chairman.

    Good morning, members of the committee. It's a real pleasure to be here. I welcome the opportunity to meet with you here today. I would like to share with you some of the good economic news coming out of the Northwest Territories, and how our residents and businesses are taking full advantage of these opportunities.

    The development of our natural resources has played an important part in the history of our economic development, and it will continue to be the primary economic driver for the Northwest Territories. Our resource potential is immense. We have developed a world-class diamond industry, and have supported the return of oil and gas development and the construction of a pipeline down the Mackenzie Valley.

    Aboriginal people have participated in the decision-making and approvals of these projects, in partnership with our government. Aboriginal communities have negotiated impact benefit agreements with the diamond mine operators. These have complemented the socio-economic agreements the mining companies have reached with the Government of the Northwest Territories, and have resulted in aggressive and progressive training and employment programs.

    Mining activities have established the right circumstances and opportunities for aboriginal business. The most rewarding aspect of the recent experience with the diamond mining industry is the establishment of a secondary industry.

    Initially, the federal government was not an advocate of a secondary diamond industry in Canada. It was the perseverance of our government in the Northwest Territories that led to the establishment of two diamond sorting plants and a diamond sorting and polishing training program. This was a first for this country, and the Northwest Territories made it happen.

    For all the positive impacts of diamond development, there has also been some frustration. The recent ruling by the federal Competition Bureau on the definition of Canadian diamonds has continually concerned the Government of the Northwest Territories. The bureau's decision implies that the location of the cutting and polishing of a rough diamond into a polished diamond is immaterial in the definition of a Canadian diamond, as long as it is demonstrated that the diamond itself originated from a Canadian mine. So a diamond cut and polished in India can be given the same certification as a diamond cut and polished in Yellowknife.

    The guidelines set by the Competition Bureau claim that by volunteer reporting, the industry will be able to differentiate between conflict diamonds and the NWT's pure and natural diamonds. We do not agree that the diamonds can be tracked in this manner. This decision perpetuates the traditional role of Canada as a harvester of raw materials, and discourages the adding of value by further processing in Canada.

    The new diamond industry has spawned a number of other opportunities for aboriginal businesses, and the range of businesses is most impressive. Aboriginal businesses provide a wide range of services, such as engineering, project management and environmental services. These accomplishments have been effectively undermined by the Competition Bureau's decision.

    The Northwest Territories also has tremendous potential in the development of oil and gas resources. Aboriginal governments and businesses have benefited from the renewed interest in developing our petroleum resources up and down the Mackenzie Valley. Business opportunities include a variety of services, including site preparation and operational support. Joint venture agreements with helicopter companies and drilling operators have also created an exciting time of economic prosperity.

    We're seeing that expertise does not always have to be imported from Calgary or other areas of southern Canada. First nation businesses have proved they can operate successful oil and gas sector businesses.

    In the Mackenzie Delta, the Inuvialuit developed a small gas field on lands they secured through their land claims agreement. A small-diameter pipeline was built to provide gas to Inuvik, a town of over 3,000 people.

    The Mackenzie Delta now has 19 exploration parcels held by the petroleum industry. Three of these parcels are Inuvialuit subsurface lands. Two years ago the Inuvialuit Corporate Group put these parcels out to bid. They collected $75 million for the exploration rights. Numerous seismic and drilling programs are being conducted in the region, bringing hope for more large gas discoveries in this very prosperous prospective region.

    This winter, oil and gas companies have spent in excess of $250 million and employed between 500 and 600 people in the Mackenzie Delta. This is a phenomenal number of jobs in an area with only 7,000 people in total. Due to our limited capacity, we must look for benefits beyond the employment opportunities. Part of these additional benefits include equity participation and partnerships in project development. Recently the Aboriginal Pipeline Group signed a memorandum of understanding with the Mackenzie Delta gas producer group for one third ownership in the Mackenzie Valley gas pipeline. This is an historic agreement.

    Aboriginal governments want to secure ownership as a means to generate business revenues and assume control over development. We are pleased that the Honourable Robert Nault, Minister of Indian Affairs and Northern Development, indicated that he looks forward to reviewing a business plan from the Aboriginal Pipeline Corporation. Meanwhile, the Aboriginal Pipeline Group is continuing with the next step in this multi-million-dollar venture.

    The development of the Mackenzie Valley pipeline will produce tremendous economic benefits to the Northwest Territories and all regions of Canada. A recent study completed by the University of Calgary shows the Mackenzie Delta gas development would have an economic impact of up to $75 billion over a 30-year timeframe. We have provided all committee members here with a package showing these economic benefits.

    We are experiencing tremendous economic opportunities in resource development. This signifies the building of a new Northwest Territories. Once complete, we envision a “have” territory that is financially self-sufficeint and economically sustainable. Our government has been preparing for this development. We have established a host of programs and initiatives intended to address the needs of our northern workforce. These programs are intended to help our government, the private sector, aboriginal organizations, and our communities.

    Part of this plan also includes growing capacity in our NWT-based business sector so that they are able to benefit from opportunities for the long-term sustainability of our economy. We do not want a boom or bust scenario. Our government has been putting this plan into place in the absence of an economic development agreement with the Government of Canada, with the last such agreement expiring in 1996. We need such an agreement to ensure that we can take advantage of all the opportunities before us. We need to build a short-term and long-term capacity and we need infrastructure and investment for the sustainable future.

    At this point in time, the Northwest Territories is experiencing an infrastructure crisis. The pressures of resource development have strained our ability to provide new infrastructure and maintain existing infrastructure. Our highways are running at capacity and the municipal infrastructure of our communities is becoming overloaded. This is all due to the rapid growth in resource development that has occurred over the last decade. Sparsely populated and remote regions such as the Northwest Territories have unique infrastructure requirements and must be afforded special consideration when strategic investments are made.

    Simply put, a per capita allocation formula does not work when contemplating strategic investments that are geared to generate significant and long-term economic benefits. The federal government needs to invest in our territory in order to realize the full economic potential that is now before us. Failure to do so could limit or impede the economic future of the Northwest Territories, to the detriment of all Canadians.

    Under current fiscal arrangements, the Government of Canada receives the majority of revenues from royalties and taxes, while the municipal and territorial aboriginal governments bear most of the economic and social costs associated with resource development.

Á  (1110)  

    We want a fair share of revenues. Some of you may not be aware of the amount of tax collected by the Government of the Northwest Territories from resource development. It is less than 5% of what the federal government collects in royalties and taxes. It is estimated that the development of Mackenzie Delta gas will provide $22 billion to the federal government in royalties and taxes. In comparison, the GNWT is only expected to receive $1.6 billion.

    Due to limitation of the fiscal benefits accruing from development, the Northwest Territories needs to achieve devolution over the management of our resources in order to have territory. As well, we need equity access to the sustainable resource royalties and revenues being generated through the development of our non-renewable resources.

    Last year, aboriginal governments, the federal government, and the Government of the Northwest Territories successfully established a groundbreaking intergovernmental forum, through which we are negotiating resource revenue sharing, devolution, and capacity building. The work of this forum is critical to helping us achieve our vision of self-sufficiency and meeting the conditions for maximum benefits from resource development.

    Before I wrap this up, I want to touch on the discussions occurring in Washington. As you may be aware, these discussions could have a very drastic impact on the development of our Mackenzie Delta gas resources. The current energy bill being debated in the U.S. Senate calls for the mandating and subsidization of an uneconomical Alaska Highway pipeline project. If this subsidized project goes ahead, it could strand our Canadian gas.

    We have fully supported market-based decisions in the development of our Arctic gas resources. The Government of Canada has maintained its stance of encouraging market efficiencies as well. This position assumes that any pipeline route through Canada will be based on the free market decision of the project proponents. However, the U.S. Congress seems to believe that a pipeline from Alaska to the North American market is a decision that only they can make. Mandating a less economic route and then proceeding to propose subsidies to improve the economics is a deliberate attempt by the U.S. Congress to interfere in a free market decision. This has compromised the Canadian position. We encourage the Government of Canada to evaluate the impact of these actions in relation to its own position and the national interest.

    I would like to thank you for the opportunity to speak with you today. It is crucial that southern Canada understand that the development of our natural resources symbolizes the continuation of the building of the nation of Canada. It is the dawn of a new era in the sustainable economic development of Canada, where the vision of a Canada that is prosperous from sea to sea to sea can finally be achieved.

    I am here in Ottawa as part of a delegation led by my premier, Stephen Kakfwi. We have met with the Prime Minister and ministers to spread our message about the tremendous opportunities in the Northwest Territories. To make the most of these opportunities, we need the Government of Canada to make an investment in our territories today, becoming a full partner in achieving our vision.

    I'd like to thank you, Mr. Chair, for allowing me to make a presentation here today. Merci.

Á  (1115)  

    The Chair: Thank you very much for an excellent presentation. Already I'm curious about finding out more. Sometimes the job of politicians is to hear about sad stories, and this seems like such a good one that it's really a treat for all of us. I know my colleagues are anxious to learn more about it.

    There will be a question period until 12:30 at the latest. The dialogue will continue this evening between seven and nine, when we meet with our guests at the Burgundy Room of the Chateau Laurier. All members of the committee and support staff are invited. We thank you very much for allowing the discussion to continue this evening.

    We have a lot of time, so we'll do seven-minute rounds if we need to. That means seven minutes for the question and the answer. It's as generous as it ever gets, because we usually have four minutes.

    Mr. Chatters.

    Mr. David Chatters (Athabasca, Canadian Alliance): Thank you, Mr. Chairman.

    Mr. Chairman, what time is the reception at the Chateau Laurier?

    The Chair: It's from seven to nine.

    Mr. David Chatters:Thank you.

    Certainly I'm most supportive of the initiatives you spoke about. I and a group from my party met some years back on the initiative of establishing a diamond cutting and polishing industry in Yellowknife, which the federal government at the time didn't look on as being particularly practical. I want to congratulate you on making that a reality.

    On the northern pipeline issue, I'm curious about the initiative in the U.S. Congress and Senate, this threat not only to subsidize the pipeline but to put a floor on the price of natural gas. What specifically were you looking for the federal government to do on that issue? The United States is a sovereign country, and it is pretty aggressive on these kinds of issues. It's not likely that the Canadian government would have a lot of direct influence over the decision of the federal government of the United States to do that. If you could elaborate on that issue, I would appreciate it.

Á  (1120)  

    Mr. Jim Antoine: As a government we've been supporting getting the delta gas down to southern markets via a stand-alone Mackenzie Valley pipeline. That has been our position all along.

    We don't want to see our gas stranded. If the U.S. goes ahead with its scheme on subsidizing the price of gas to the producers, that's going to have an effect. If the decision is made to go ahead and build an Alaska pipeline, then there's a real danger of our gas being stranded, and we don't want to see that. It's going to have a big impact on us in the Northwest Territories, as well as on the rest of Canada.

    We think our federal government should continue to dialogue nation to nation to emphasize the point that this is a North American project. It's not a U.S. project. This pipeline will have to go through Canada at some point. Our position, along with that of the Canadian government, has always been to leave it up to the industry to determine whether or not they're going to build a pipeline based on the price of the natural gas. The Americans are going ahead and making the arrangements to build it under subsidization. We want to urge the Canadian government to continue the position that the market should determine the most economical way to build this pipeline.

    Mr. David Chatters: I appreciate that position and I certainly support it. I think the era of government interference in the marketplace and government regulations on the price of energy is long past, and the project has to stand or fall on the economics of it.

    The Alaskan government passing a law about the over-the-top route is a direct interference in the economics of the project. But quite clearly on other issues before us, such as softwood lumber and steel, the dialogue we have with the United States doesn't appear to have a great impact on their decisions. I just wondered if we could be more aggressive to ensure that market forces do in fact drive this project, rather than government interference and subsidization. We seem to be sitting here wringing our hands about what the U.S. is doing and being unable to do anything about it.

    I wonder if you have some ideas whereby we could take some more direct action so that we might have more influence on the decision of the U.S. Congress and Senate.

Á  (1125)  

    Mr. Jim Antoine: Yes, as a government we're aware of what's going on with regard to softwood lumber and steel, but we're not directly involved in the debate. As to the position of our Canadian government and the different ministers responsible for the negotiations, I don't really know for sure what they're doing.

    Part of our delegation later on will be meeting with some of these ministers and perhaps we will ask them directly what they have in mind. I've seen a few things in the paper about Minister Dhaliwal and his comments. A reaction to the comments is that perhaps this is one way of getting some attention and perhaps following through with that type of...I don't know whether it was a threat or a suggestion, but a reaction to what's going on in the softwood lumber. But as a government, we haven't really talked about it. My own personal reaction here is this is probably a way of making sure that we are heard south of the border.

    Mr. David Chatters: I think there are some ideas that I'll share with you later, but I think my time is out.

    Thank you.

    The Chair: Thank you, Mr. Chatters.

    Are you meeting with Mr. Dhaliwal this afternoon?

    Mr. Jim Antoine: He's out of town.

    The Chair: Otherwise, you could have shared some of the dialogue with us this evening. But feel free to send us a document after, if you feel that the committee should be aware of certain circumstances or certain discussions.

    Ms. Karetak-Lindell.

    Ms. Nancy Karetak-Lindell (Nunavut, Lib.): You mentioned the Aboriginal Pipeline Group, and I have to admit that I don't know exactly who is in that group, whether it's all the aboriginal groups in NWT. I'm wondering how many of them have signed on. I know there are outstanding land claims discussions going on. How does that impact on the group itself?

    I know the Inuvialuit have been very aggressive in taking advantage of economic development. We hear a lot about them, so I know more about their status. But I know there are other groups along the way that are impacted also. Could you maybe shed some light on the situation there?

    Mr. Jim Antoine: Thank you.

    About two years ago, when there was the whole discussion about the possibility of more gas exploration, that we have proven reserves in the Mackenzie Delta of nine trillion cubic feet of natural gas, there was a lot of interest in pursuing that. There was a meeting of all the aboriginal leaders in Fort Liard, and the discussion was on how they could maximize the benefit from resource development on their own lands. As a result of this meeting, there was another meeting six months later, in June, in Fort Simpson, where there was enough work done that they decided to form an aboriginal pipeline group.

    At the initial meeting, all the leaders from the different tribal councils and the chiefs, Métis leaders, signed this cooperation initiative to work together to try to maximize benefits from resource development. The discussion at the initial meeting was that if there was going to be a pipeline, why not try to own the pipeline, or make some arrangements to be an equity participant in the pipeline.

    It was at the second meeting that the Aboriginal Pipeline Group was formed, and its task was to try to get an arrangement with the producers to see what the possibilities were for having equity in the pipeline. As a result, there was a memorandum of understanding that was developed that laid out the principles on how the producer group would work with the aboriginal leaders down the valley. The debate is still going on. There is still a lot of discussion going on. Not all the groups have signed on to the APG, but the majority of the people down the valley have signed on.

    The debate is on, but as you know, the delta producing groups have initiated a letter of intent to pursue development of a pipeline. There will be a project information package that they will produce by next year. There is a lot of work they have to do.

    Those who have signed on to the MOU with the producer groups are proceeding with the intention of going through the environmental process, all the necessary steps, and they hope to have a pipeline by 2008.

    Those who signed on are the Inuvialuit, some Gwich'in, and in the Sahtu area there are some signatures. Some of the bands in the Deh Cho have signed on, but right now, there are land claims going on in the Deh Cho area. They are negotiating land claims--the “Deh Cho process”, they call it. It's their own type of process. They just started their negotiations, and they have agreed to a framework agreement. They also agreed to have an interim agreement on how to get resource development in their area. A majority of the leadership has signed on, but there are some who haven't signed on for their own political reasons and for negotiation reasons.

    Thank you.

Á  (1130)  

    Ms. Nancy Karetak-Lindell: We know this is a quite different scenario from the past when the Berger inquiry was on, and they refused the pipeline then. My understanding from that is that there wasn't enough involvement of aboriginal people. And now, this time, they are totally, or hopefully totally, in control of their own participation in it. I just wondered if you could comment a bit about the difference between that first pipeline that they had the inquiry on and the process today.

    Mr. Jim Antoine: We've seen a big difference for aboriginal people in the Northwest Territories in the last 25 years because of the land claims process. The Inuvialuit have settled their claims, as have the Gwich'in and the Sahtu. The Dogribs are pretty close to initialling the final agreement, and the Deh Cho have started their negotiations. Most of the regions in the north and the central area have concluded their land claims.

    A lot of the different bands, the different tribal groups, and the Métis have gotten involved in business within the last 25 years. They have their own development corporations, and they have been very successful in getting involved in business. In my presentation I talk about the small-diameter gas pipeline that's feeding natural gas to Inuvik. That's done by the Inuvialuit through their own corporation, and they have successfully done that.

    In the Fort Liard area the band there has been involved in opening some of their areas for exploration in the last six years. I know there is natural gas that has actually been found, and they have pipelines taking the gas down into northern B.C. now. The band itself was involved in it, and they have their own corporation that supplies the camps, a construction company, and airline and helicopter companies.

    Within the last 25 years different aboriginal groups, certain ones, have come a long way. The Dogribs have corporations that are providing services to the diamond mines, for example, and construction companies that have joined forces with engineering companies and environmental companies. Within the last 25 years aboriginal people in the north have come a long way.

    Twenty-five years ago we were in no position to participate in any type of major resource development, but two years ago the reason our government supported the aboriginal pipeline group was that finally, after 25 years, all the leadership got together and said okay, there's going to be development, and we want to be a major player in it. That's the reason we supported it.

Á  (1135)  

    The Chair: Thank you.

    Monsieur Cardin.

[Translation]

    Mr. Serge Cardin (Sherbrooke, BQ): Thank you, Mr. Chairman. Good morning gentlemen and welcome to the committee. To begin, I must tell you that I will have to leave...

    The Chair: Mr. Cardin, do you realize that there is a reception this evening where we can continue our discussions?

    Mr. Serge Cardin: Yes, you told me.

    The Chair: All right.

    Mr. Serge Cardin: I must tell you that I will have to leave early, in a few moments, but it is not because of a lack of interest or respect for your presentation. Sometimes we have other obligations, and my colleague, who is normally the person involved in native affairs, is not here today. I, myself, am involved with the issue of natural resources and other important matters, such as sustainable development. My question will deal with those issues.

    Of course, I strongly support the fact that native people want to control their own economic development and autonomy, and I know that native people, first nations, may be more aware of the importance of respecting the environment and wildlife...

    You are also the minister for Wildlife, so, in a way, that would also make you minister of the Environment. Given the overall gas, or even oil, exploration project which will be developed over the coming years, or which has already begun, are you or your government concerned that the development of an entire energy industry, which may possibly involve exporting to the United States, will have a greenhouse gas effect? Do you feel that the first nations who will control their own economy will be more sensitive to the potential environmental impact of all this development in the territories?

[English]

    Mr. Jim Antoine: Yes, you mentioned the greenhouse gas effect and the warming of the climate. We've been experiencing the effects on our environment through the warming of the atmosphere for some time now. You see it actually visibly, because in the north it's all ice and the permafrost under the ground seems to be melting and is causing a lot of effects. We see the change in our climate up in the north and we see changes in our vegetation. Different animals, different birds are coming up there now. They have a longer warm period and a very short cold period. We do see the effects of what's happening.

    My understanding of the debate is we have the natural gas that's up in the north going to southern markets. The way I understand the plan so far is that they will take the natural gas from the delta through the pipeline and put it into the Alberta pipeline systems, and the producer will determine where they will sell this gas. A lot of the natural gas is going to be used, I understand, to produce energy rather than burning coal. I understand that natural gas burns cleaner, with better effects for the environment.

    As to the actual construction of the Mackenzie Valley pipeline, there is a pipeline already that exists in the north, taking oil from Norman Wells in the central part of the Northwest Territories down into the Alberta markets. The pipeline is buried, and it seems there's no problem with the ice once you put the pipe in the ground. There's very little effect to the environment. To put the pipeline in from the Mackenzie Delta, they will do a gathering system from the fields into a central area and then they'll put in the pipeline.

    The exploration that's going on is quite massive, but they're doing seismic surveys. They're doing this in different places, wherever they have some drilling rigs. That's having some effect. But my understanding of the reports I get from my department is that they don't see any major environmental disruption as a result of that.

    Generally we are concerned about it. During the planning for the pipeline there will be a lot of studies. There have already been a lot of studies done in the north on the different areas. We want to do more so that we know what the environment is like and so that we'll have a good database before we allow any construction to go on in our area.

    There has also been a big push for having some protected area. We call it the protected area strategy, where different communities identify certain areas they want to preserve, to keep it in a natural state, so that no development will happen there. We've identified a few areas and there are a few other areas that have been identified. We want to make sure they're protected and kept in their natural state for cultural reasons, for traditional reasons, for maybe a different ecosystem reason. So we're doing a number of initiatives.

    My portfolio is RWED--Resources, Wildlife and Economic Development. I'm responsible for oil and gas and mining as well as the environment and wildlife. There is a lot of responsibility in this portfolio. However, we're taking a balanced approach and we're not going all out just for development. We'd like to have development in a very sustainable way, so that it also really protects the environment at the same time.

    As an aboriginal person, some of our elders when we talk about the pipeline always emphasize what kind of effect it's going to have on our environment, on the land, under the rivers, and so forth.

Á  (1140)  

    We are very much aware of concern for the environment, and if this development goes ahead, we want to make sure that we have a good information database. Now environment is so important that whatever development is going to happen there will be done in a way where it will be least disruptive to the environment.

    The Chair: Thank you.

    Mr. Bagnell.

    Mr. Larry Bagnell (Yukon, Lib.): Thank you for coming. It's great to have some northerners here.

    To start out, I take a slightly different approach from Mr. Chatters to the repayable subsidy from the United States, because I think virtually everyone agrees that the best benefit for Canada is two pipelines. If the United States wants to subsidize the second one, which would put the huge benefits that Mr. Antoine referred to in Canada, I don't have objection to that.

    My question is related to the regulatory environment. I know there's been some concern as to whether when you're ready Canada will be ready to do the permits. It's a very complicated government system because there are all the different orders of government: the first nations, the various bodies created through land claims, the GNWT, municipalities, and everything. Perhaps you could describe briefly, for those who don't understand, what the regulatory approval will be for this pipeline, and second, say whether you have any concerns about the Government of Canada being ready to do this quickly. If we snooze, we lose. We have to be able to do the permits quickly so we can get on with the project.

Á  (1145)  

    Mr. Jim Antoine: Thank you.

    The regulatory regime that has to assess any pipeline or any development in the north is certainly controlled by the government in Ottawa. In the Northwest Territories, because we're just a territory and not a province, this is controlled by Ottawa.

    You have a number of bodies that have similar responsibilities, and, as a result of that, the permitting process, the environmental assessment, could be very lengthy if we don't do anything about it. The ministers who are responsible for that, the Minister of DIAND and Minister of Environment, have for two years now, since the spring of 2000, been doing a cooperative approach with all the different agencies that are out there to see if they could work together to streamline their processes so that once a formal application is made for a pipeline the permitting would not be so long and will be done in a shorter period of time than it has been so far.

    This is where we're at. There will be a report, a regulatory cooperation plan. There is the Mackenzie Valley Environmental Impact Review Board, which is DIAND's responsibility and is made up of a number of people from the north. They have the responsibility to review any applications that come forward. We also have the National Energy Board that is there and is taking care of crown land. In the Northwest Territories there is a lot of crown land, so it has responsibility as well. They have been working together to try to have a smoother and quicker process.

    Thank you.

    Mr. Larry Bagnell: Related to the proposed U.S. Congress repayable subsidy on stranding gas, all the gas experts suggest that the total amount in the north that would go down both the Mackenzie Valley pipeline and the Alaska pipeline doesn't broach even nearly the need--it's far less than even half the need in the United States because they are using so much gas for power generation, etc. So if it is not even meeting half the need, with everything put together, I don't understand how one project would have any effect on the other when all the gas is needed.

    Mr. Jim Antoine: We've been talking about it in the north and the possibilities of “what if”. Right now the delta producers in the Northwest Territories are in the beginning of the planning stages. After about two or three years of study, they'll come to a decision point, when they will decide whether they're going to order the pipe to actually build it. So there are about two or three years of study that still need to happen. There's still a possibility that they may come to a decision point at that time, whether to really go ahead or not. That's the timeframe we're looking at.

    As for the two pipelines, we also are looking at what the possibilities are. There are a lot of different companies in the pipeline industry that are developing scenarios of their own, some of their own ideas on how they could do it if they would do it. There is talk of two pipelines, one in Alaska and one in the Northwest Territories. The question is whether both can be built economically at the same time. These are big projects. I think this pipeline down the valley is going to be the next great Canadian project. It's going to be beneficial for all of Canada. The producers and the people who own the gas are going to be deciding whether they can afford to build two pipelines. So that is the question.

    I don't know when these decisions are going to be made, but part of our discussion and concern is that I don't think the companies will be able to build two pipelines. A pipeline in the Northwest Territories is going to cost about $3 billion. There are all kinds of estimates for the pipeline in Alaska, from $15 billion to about $20 billion. That's a lot of investment, a lot of capital required to build both. If the producers want to have the natural gas go to market, we're saying it should be based on economics and the market should determine whether it's economically feasible to build these pipelines.

    Studies say it's economically feasible to do the one in the Northwest Territories, so they initiated this process, but that one in Alaska isn't. The different proponents there in Alaska--BP, Exxon, Mobil--have more or less stepped away from the economic viability of building a pipeline based on economics. With the subsidization and the different schemes the Americans are putting together, it's certainly going to have an effect. A decision is going to be made by them on whether they're going to go ahead with the Alaska pipeline or the one in the Northwest Territories. I guess the question is whether they can afford to build both pipelines at the same time and which one they will choose.

Á  (1150)  

    The Chair: Thank you.

    Mr. Chatters.

    Mr. David Chatters: Thank you, Mr. Chairman.

    There are certainly a lot of other issues around that whole American subsidization scheme, but I wanted to touch on another area that I think is going to be controversial and comes out of some of your comments.

    The Prime Minister, on a number of occasions, has kind of discounted the possibility of the federal government participating in another energy megaproject. That's fairly well known. The Minister of Natural Resources, before this committee, quite clearly stated that his government was not interested in financing pipelines. Mr. Nault recently suggested that he's open to a proposal from the aboriginal ownership group for a substantial amount of money for government financing of some kind.

    Given that the gas producers are some of the largest multinational corporations in the world and the fact that there are large pools of venture capital available for energy development in Canada and the U.S., I'd like to hear your views on that whole issue of the federal government investing in or financing the aboriginal ownership proposal. That is going to be a fairly controversial issue when and if it comes to the Government of Canada.

    Mr. Jim Antoine: As the Government of the Northwest Territories, we support the idea of resource development in our area. We see aboriginal participation and owning a third of a pipeline down the Mackenzie Valley as something that is very new. It's unique and it's different. It's groundbreaking, and we certainly would like to see it happen. They would need capital. This pipeline is going to cost $3 billion, so if they're going to be a third owner, they need a billion dollars, and they also need some dollars up front to do the preparatory work.

    There is a requirement there by the Aboriginal Pipeline Group. They're looking at a number of different financial models, both with and without government. They are developing their package, and it's going to be out very soon. It's their initiative. They're supported, but we don't really know what their scheme looks like. They have approached government. Once they finish their package of information with their different consultants and financial groups, they will probably come here to Ottawa too and approach the different ministers. I would like to support them if we had the dollars, but we don't. The federal government does, and I think it would be a very good investment for them to support the Aboriginal Pipeline Group. There is a possibility there.

    I know what the Prime Minister and this federal government have been saying about not participating any more in energy megaprojects, but with Minister Nault giving the signal that he's open to look at it, which is good news for us, there is hopefully some support.

    There are different approaches by the Aboriginal Pipeline Group I've heard, but as I said, they don't have their package prepared, so I can't speak on that at this point in time. If they are going to approach the government, then I think the government should take a really close look at it.

Á  (1155)  

    Mr. David Chatters: It seems to me that we met a while ago with another group from the Northwest Territories that was in Ottawa. They described, as you have, the real need now for infrastructure development in the Northwest Territories.

    Contrary to your comment, I think Ottawa has very limited numbers of dollars. It would strike me that there is venture capital available that can be invested to build the pipeline. However, the federal government, if they have a billion dollars, in my judgment that billion dollars would be better invested in infrastructure in the Northwest Territories to support that development than it would in buying an equity share in a pipeline in the Northwest Territories.

    There is in fact money available to finance pipeline building. There is no money available, clearly, from your government, or the private sector is not willing to invest in the infrastructure development that needs to happen. There's a bit of a conflict there that needs to be looked at carefully.

    The Chair: Thank you.

    Did you wish to respond to this, Mr. Antoine?

    Mr. Jim Antoine: Yes. I just wanted to say that in my presentation I talk about this devolution and resource revenue-sharing discussion through an intergovernmental forum. When we talk about devolution, it's about the Northwest Territories taking over control of our natural resources, as all the provinces have done. The Yukon has done this very recently, taken over control of some of their own natural resources.

    If we're able to do that, then.... I don't know how long it's going to take, this intergovernmental forum for trying to negotiate with the federal government. We hope to start soon on this devolution process.

    In the long run, if we're able to have control of our own natural resources, then we might be able to afford supporting something like that. At this point in time, we're not. As the Government of the Northwest Territories, we exist on a grant from the federal government to run the Northwest Territories. We top it off with the taxes, but the majority of the dollars come from the federal government.

    With the resource development going on in the north, such as the diamond mine now paying royalties to the federal government, there are a lot of dollars that are going to eventually flow, particularly with the second diamond mine that is going to start operating this time next year.

    As to oil and gas exploration, if the pipeline goes through, there's going to be a lot of revenue flowing from our natural resources in the Northwest Territories to the federal government.

  (1200)  

    The Chair: Mr. Finlay.

    Mr. John Finlay (Oxford, Lib.): Thank you, Mr. Chairman.

    Mr. Minister and Mr. Brackman, it's good of you to come. We are certainly learning and updating our knowledge.

    I'm going to go back in history a little bit, because of my interest in the environment earlier on. You mentioned Justice Berger and the Mackenzie pipeline inquiry of some 25 years or so ago and the fact that the development was turned down. My memory is that the main problem was that the pipeline would interfere with the migration of the Porcupine caribou herd across the Northwest Territories. I understood it was partly because the pipeline would have to be above ground because of the permafrost. I think you've just told us that's old science or engineering and that I'm not right in that. Maybe you could enlighten me.

    Mr. Jim Antoine: Our understanding of the preliminary discussions on what they're going to do with the pipeline if it comes out of the Mackenzie Delta is that using today's technology they will bury the pipeline and they will also chill it so that it doesn't thaw out the permafrost. That's the kind of technology they'll be using.

    Mr. John Finlay: So it wouldn't be a hazard to the migration and so on of the wildlife in the area.

    Mr. Jim Antoine: No, it's not going to be a hazard. It's going to be buried. The pipeline will be going along the Mackenzie Valley, which is a natural barrier for migration. We'll make sure that it's environmentally safe and that it doesn't disrupt the environment too much.

    The Chair: Mr. Chatters.

    Mr. David Chatters: On the issue we're discussing, going back to the days of the Berger inquiry and the study that was done, I think it was based on an oil pipeline, which creates problems with permafrost. A natural gas pipeline is quite a different ball of wax, of course, along with the technology.

    That leads me to my question. When I spoke to the Alberta government, they seemed pretty confident that the over-the-top route is not dead and is still a good possibility. It wasn't based on a double seabed pipeline in the Beaufort Sea but instead on an on-land pipeline, either above ground or underground from the north slope across the north coast of Canada to the Mackenzie Delta. In that situation it would more likely be above ground. In your view, is that still a possibility? Is that something your government would support?

    Mr. Jim Antoine: Again, we'll leave it up to the producers to determine that through the market forces. We've supported the over-the-top route taking Alaska natural gas to southern markets. We're saying that it's a shorter route and is less costly than going through Alaska. If there's a pipeline to be built, then certainly we would support over the top. But up to this point in time the discussion has been about supporting a pipeline that's not on land because of the wildlife refuge there. The pipeline industry people are telling us that it's feasible to do that.

    Mr. David Chatters: On land.

    Mr. Jim Antoine: In the water.

    Mr. David Chatters: Oh, in the water.

    Mr. Jim Antoine: Yes.

  (1205)  

    The Chair: Mr. Minister, at this point I'll interrupt and ask you to clarify what over the top actually means so that we all understand.

    Mr. Jim Antoine: Well, over the top is taking Prudeau Bay gas from northern Alaska, putting it in the ocean in the Beaufort Sea, burying it, running it to the Mackenzie Delta and then down the Mackenzie Valley.

    Mr. David Chatters: It seems that everyone...because of the bill that the Alaska legislature passed making the sub-sea pipeline impossible, unless they change their minds. But it doesn't necessarily mean that an on-land pipeline wouldn't be feasible. I think the Berger inquiry that did the study certainly suggested that an above-ground pipeline did not affect the caribou migration or the caribou herd in any significant way. They seem to pass back and forth under the pipeline and certainly spend their time scratching on the supports and all of those things.

    So it seems that it's going to be an over-the-top route. An on-land over-the-top route is the only feasible option left there. It would appear that your government hadn't really considered that an option. But it's strange that the Alberta government seems to have supposed that's the practical way it will in fact happen. It is interesting.

    Mr. Jim Antoine: It's a practical way to do it, it's true, but there are certain conditions up there. We've been supporting the ANWR. In our government the Gwich'in Nation extends from Fort McPherson to Aklavik, Inuvik to northern Yukon into Alaska. The Gwich'in have been very supportive of keeping ANWR, the Arctic National Wildlife Refuge, intact with no exploration in it. We respect--

    A voice: With no development.

    Mr. Jim Antoine: No development. We have members in our legislative assembly who keep reminding us, too. So we haven't even talked about it or thought about it.

    Thank you.

    The Chair: Are there any questions?

    Mr. Bagnell.

    Mr. Larry Bagnell: I have a question related to ANWR. Maybe I missed this when I was out of the room, but yesterday I think in The Wall Street Journal or The Washington Post there were some articles related to this same energy bill before the U.S. Senate. I'm curious as to your read on whether there is, or will be, amendments related to ANWR and what chance of success they have of being passed.

    The Chair: If you wish to invite your colleague to the table, it's quite okay. I ask that you first identify yourself for the record.

    Mr. Brian Kennedy (Government Relations Consultant, Government of the Northwest Territories): ANWR is the Alaska National Wildlife Refuge. And as you are aware or may not be aware, the Republicans in the United States Senate will be bringing in an amendment tonight, or at some point supposedly this week, that will ask to do test drilling in 2,000 acres--I'm not sure of that in hectares now--of a portion of the ANWR.

    That vote should happen at some point this week, if it's brought in tonight. It's already in a House bill that has passed in the congressional House. Even if the vote in the United States Senate did not pass, it is still in another bill in the House. You know the system. When they go to conference, it will still come up in that area, because it has passed one portion of the United States Congress.

  (1210)  

    Mr. Larry Bagnell: First of all, in the Senate vote, do you think that will pass?

    Mr. Brian Kennedy: It was my understanding the last time I was talking to a number of senators last week that the vote will be very close. It's a lot closer than I think a lot of people suspect.

    It's my understanding that they're jockeying and they're talking about three or four votes. In this particular vote it has to be a 60-vote majority because of the way the bill was brought into the United States Senate. If it were brought out of committee, it would have been a 50 vote, but since the majority leader of the Senate, Tom Daschle, pulled it and brought it in himself, it makes it a 60-vote majority to pass, because it comes through as a Republican amendment.

    Mr. Larry Bagnell: Let's assume that fails; they can't get their 60%. What about when the House initiative comes to the Senate? Will that be a 50% vote or a 60% vote?

    Mr. Brian Kennedy: What will happen when it goes to conference...both parties have an equal number of delegates at this conference. I'm not sure how many there are. They will have to iron it out. They will duke it out, probably the way a committee dukes it out to say, well, this is going to be in the final bill, and this is not going to be in the final bill. But it will be put before the conference.

    If it's on both sides of the bill, it will likely make it. But if it only comes from one side, that still could be a major battle. That's why I would assume the Republicans are hoping to get enough votes this week to get it passed.

    Mr. Larry Bagnell: After the House bill goes to conference, whatever is decided in conference, does it still have to get voted on in the House and Senate after that?

    Mr. Brian Kennedy: Once it goes to conference, the bill is completed and it will go to the President for his signature. The President has the right to veto it if he doesn't like it or sign it if he does like it. Once it's through conference, it's sent to the President for his signature.

    Mr. Larry Bagnell: Last question. Jim, is your government taking any action related to this putting of ANWR in jeopardy, this most current one?

    Mr. Jim Antoine: Well, the Canadian government represents us in that regard, and as a government, we support the Gwich'in and the protection for the Porcupine caribou herd. We are giving that message to the federal government, the ministers responsible. We don't play roles at all; we state our preference in our support.

    Thank you.

    The Chair: Mr. Godfrey.

    Mr. John Godfrey (Don Valley West, Lib.): I would just like to make sure I understand the double majority business. When you talked about it being close, within three or four, you were talking about close in terms of the 60 required. In other words, they have the 50.

    Mr. Brian Kennedy: That's why the Republicans will argue that's why the bill was, as they would say, hijacked out of committee: because they had enough votes in committee to move it forward in the bill, and if it had gone in that direction, it would have been a 50 vote. But the Senate majority leader has the right to take the bill out of committee and make up his own bill, and that's what he did to make it a 60 vote. So yes, in all likelihood it would have passed the committee stage, and in all likelihood it would have been in the bill. At this point my understanding is that it would have passed, but with the 60 votes, it makes it a little tougher.

    Mr. John Godfrey: Would it be naive of me to assume from the fact that Mr. Daschle did this that he was against the bill, or is it that I just have to...?

    Mr. Brian Kennedy: I would assume that you're right there, sir, that Senator Daschle and a lot of the Democrats are absolutely opposed to any drilling in the wildlife refuge. There are a few, according to my understanding, from some of the gas-producing states. Some Democrats have probably been swayed by the Republicans to vote that way, and that's why the bill was taken out of committee.

  (1215)  

    The Chair: I'm curious to know how many members are on a committee--aside from our subject today--but approximately.

    Mr. Brian Kennedy: There are probably 13, and given the circumstance that the Senate was 50-50, there were two chairmen at one time. They were both co-chairmen, but since then it has sort of switched over. I think there are 13, and as you well know, whoever is in the majority has that extra vote.

    The Chair: In our committee we are 16, with five different political parties, and we're a combined committee of aboriginal affairs and natural resources. I hesitated before accepting the job, but it's going very well, thanks to my colleagues.

    Mr. David Chatters: I'm sure you don't have anybody on the committee who's ninety-some years old, either.

    The Chair: Thank you very much.

    Are there other questions before I ask for closing remarks from Mr. Minister?

    You can include this in closing remarks. You can take the time you need to make your closing remarks and add this issue. The floor is yours.

    Mr. Jim Antoine: First of all, I'd like to thank you, Mr. Chairman and committee members. Some of you I've only just met, some of you I've known for a long time, and certainly as government in the Northwest Territories we need to work closely with you as members of Parliament.

    I'd like to try to bring you all up to date on what we're doing in the north, what's happening over there, and what we need. We all need a few things, and we're down here talking to the ministers about infrastructure dollars that Minister Manley is responsible for. We want to influence his criteria, the policies that he's going to put in place. So we'd like to do that.

    As well, there's the pipeline. We want to mention that if Alaska gas goes first we are very fearful that it could strand the delta gas. I want to make that point. Looking at the economics, we still have a long way to go. Developing the proposal for a building of the pipeline while this American scenario plays itself out is complex. If it's only the pipeline in the Mackenzie Valley it's okay, but then we're also concerned with an outside factor that may influence the building of this pipeline.

    Again, thank you very much.

    The Chair: Thank you very much, all of you. It was very interesting.

    As I mentioned before, colleagues, we will continue the dialogue this evening at seven o'clock until nine at the Burgundy Room of the Chateau Laurier. Tomorrow afternoon we are having a roundtable with the Northwest Territories Arctic Tourism Group. That is a 3:30 in room 104 of Justice.

    We will follow up with a phone call to every member. Thank you very much for your presentation and we look forward to being with you this evening.

    Colleagues, we have no meeting scheduled for Thursday and so far, we have no meetings scheduled for next week. I suspect we'll get some response from the minister pretty soon and we'll find out.

    Ms. Lindell had asked first. Ms. Lindell.

    Ms. Nancy Karetak-Lindell: I have a request also. I'm not sure how you want to deal with this. We have the Nunavut Association of Municipalities meeting here April 29, I believe. They have decided to familiarize themselves with how the federal government works. These are the mayors of the 26 municipalities. They are extending an invitation to the committee to address them Tuesday at 10:15. I don't know if you've received the request yet.

    The Chair: We did receive the request. My normal path is to share it with all members.

    Ms. Nancy Karetak-Lindell: I should think it would just be an information session as to what our role is and how it affects, whether we can hear presentations, who we hear presentations from, just so they're more familiar with how to go about doing their job also.

    The Chair: Do they wish to do this in a formal committee meeting, or in a reception type where everything is more open?

    Ms. Nancy Karetak-Lindell: That's what I'm going to suggest to them. I am going to speak with the president of the association so I can get a better idea of what their expectations are. I did recommend to my staff that it might be easier to just have your presence and other committee members' presence at a reception and to speak with them.

    I can get back to you on that. I will speak to the president.

  (1220)  

    The Chair: Please do, and that is what I would recommend.

    Ms. Nancy Karetak-Lindell: That should narrow their scope down as to what types of questions they want.

    The Chair: If we do it in an informal session, a reception, I find that we get more information out of it. The other day it was very informative. There's no time limit by the chair. I would recommend that. If they choose not to do that, let me know what it is they would like.

    Ms. Karetak-Lindell: I'll get back to you.

    The Chair: We'll try to accommodate.

    Mr. Chatters.

    Mr. David Chatters: I have a request for a more formal committee meeting to present. This comes from Andy Burton, who is now my deputy critic and responsible for forestry issues. He is a new member of the committee, and he is requesting a briefing--I am not sure who he is expecting the briefing from--on this mountain pine beetle infestation in British Columbia. He thinks it's a very important issue and one the committee needs to know more about. He's requesting a meeting and a briefing on that issue. This is his letter.

    The Chair: Is he asking for a briefing, or is he asking to give a briefing to the committee?

    Mr. David Chatters: He's asking for a briefing, but I'm not sure if he's specifically asking to have it from the department or perhaps from the British Columbia department of forestry.

    The Chair: What we'll do with this request is share it with all members. If members wish to have a briefing on this, we will arrange it with the department, apart from a formal meeting. Is that okay?

    Mr. David Chatters: Sure.

    The Chair: I can tell you the same situation exists in northern Ontario, where there's a lot of research done on this. If it's a briefing we need, we can arrange those at any time.

    Is there anyone else? Mr. Bagnell.

    Mr. Larry Bagnell: Because there's another Canadian route with a lot of Canadian benefits and a lot of views, you may get a similar request from the Yukon government to do the same thing that happened today so that there's the other side of the picture.

    The Chair: My recommendation to the committee is that whenever any level of government asks to meet with the committee, we should try to make ourselves available. For the private sector it's more difficult, because if we open the door to one, we should offer that to all their competitors. That's why I use the reception route, especially for the private sector.

    Thank you very much.

    We're adjourned.