Notes for an address by

Andrei Sulzenko
Chief Representative for the Mackenzie Gas Project
to the
Far North Oil and Gas Forum

Calgary, Alberta
September 27, 2006

Check against delivery

Thank you for that kind introduction. Minister Prentice regrets that he could not be here today to address so many key partners in Northern oil and gas development at one time. He recognizes that the importance of this annual event has grown steadily during its eight-year history.

I am Andrei Sulzenko, Chief Representative for the Mackenzie Gas Project for the Government of Canada. My job is to assist the Minister in his role as lead federal Minister on the Mackenzie Gas Project. And I'm pleased to have this opportunity to be here today.

Despite some of the recent news, there is good reason to be optimistic about the future of oil and gas development in the North. Prices are stable, demand is strong and more Northerners than ever before have the skills and expertise needed to participate in development projects.

Today, an abundance of proposals and projects are at various phases of development across the region: in Alaska, Yukon, the Northwest Territories and Nunavut.

Including the MGP, investors could inject some $20 billion over the next 15 years to explore, develop and transport northern oil and gas to southern markets.

Prime Minister Harper has recognized that the North's vast energy potential can generate tremendous opportunities for economic and social development. Since his appointment, Minister Prentice has had the opportunity to travel to the North twice, including a trip in August with the Prime Minister.

These trips have been very fruitful and have allowed him to meet a number of Northerners to discuss a variety of files, including the Mackenzie Gas Project.

I will also be traveling North next month, as well as back to Calgary, and will meet with as many of the project's stakeholders as possible.

The MGP is a basin-opening project and, as such, a critical piece of the economic infrastructure required to bring Northern resources South.

This project will contribute substantially to Canada's GDP, but its main impact will be in the North in helping to build a sustainable Northern economy.

The Minister is pleased that the Mackenzie Gas Project continues to move ahead, with substantial support from Northerners. This is clearly a priority project for Canada's new government, and it is committed to fulfilling its part wherever it has a role in ensuring the project's success.

The project has been a long time in coming but still has a long way to go, and I am determined to do what I can to help bring it home.

Having said that, there are three major requirements that must be met for the MGP to go ahead. The Government of Canada can play a useful role and support all three, but it cannot make it happen on its own.

First, the project must pass rigorous environmental assessments and satisfy regulatory requirements.

Second, there must be substantial support from Northerners-both Aboriginal and non-Aboriginal-who will participate in and benefit from the project.

Third, it is important to remember that the proposal from Imperial Oil and its partners is a commercial one. Ultimately, the market must decide whether or not it proceeds.

Let me deal briefly with each of these requirements in turn.

Canada's new government has taken steps to improve its management of pipelines and to eliminate any unnecessary delays in proposed projects. Upon taking office, for example, the Prime Minister took the unprecedented step of assigning responsibility for pipelines to the Minister of Indian Affairs and Northern Development.

In response to the increasing burden on regulatory boards in the North in struggling to keep up with the accelerating pace of development, the Minister has assigned officials in the department to provide Northern review boards with technical and administrative support.

Given the number of projects on the horizon, regulatory boards must have the support needed to consider applications in a comprehensive manner and to render clear and consistent rulings.

Mechanisms are now being put in place to exchange best practices among Northern boards and agencies, and to improve the services they deliver. For example, I will be attending a regulators' workshop in Yellowknife in the next few weeks.

Remember that the MGP is unprecedented in size and scope. The regulatory process is complex and involves several boards and review panels in the North. One of the most significant is the Joint Review Panel (JRP).

This summer the Joint Review Panel announced that it would need more time to complete its work. It is, of course, essential that the panel have the time it needs to do a thorough job.

However, we are hopeful that the Panel and interveners will find ways to complete their work in an efficient and timely way. The government will continue to provide the Panel, along with Aboriginal and Northern groups, the tools and resources they need to work effectively.

The Minister fully expects that the kinds of mechanisms that I have outlined will also enhance the regulatory, permitting and licensing review processes associated with the Project that will follow the Joint Review Panel's assessment.

The second key issue for the Project is ensuring that Northerners support it, participate in it, and derive long term benefit from it.

It is fair to say, based on reports from the various review hearings, that support in the North for the Project is not universal. Hopefully support will grow as Northerners are better able to assess the overall benefits to them. Although substantial support is required, the Minister has said that no single group will have a veto on the MGP.

A prime example of an organization that is working to ensure that benefits accrue to Northerners is the Aboriginal Pipeline Group (APG). Another precedent-setting initiative, the APG stands to acquire up to one-third ownership in the pipeline, with the resulting long term economic benefits to participating members once the gas moves to market.

At the same time, the government recognizes that building and operating a pipeline through a fragile environment could have significant impacts on the people who live there.

Canada's new government has taken decisive action to address public concerns over potential negative impacts that the MGP could have on Northern communities.

To assist in community development for those Northerners who may be affected by the Project, this year's budget announced $500 million dollars for the MGP Impacts Fund, contingent on the Project proceeding. Work is now under way to transform the enabling legislation into a system of governance that will ensure that the Fund is managed effectively.

The third key issue is the economics of the Project itself. The boom in the resource sector in Canada has placed pressure on costs and availability for new projects. The Project proponents are working hard on containing those pressures while maintaining the Project schedule. The results of this effort will hopefully be known later in the Fall.

I want to stress, however, that this is a private sector project, financed by private sector dollars, and the market will ultimately decide whether or not the project proceeds. The government has no interest and no role in subsidizing a private sector project.

Where governments do have a clear role, is in ensuring a fiscal environment , economic and social policies, and public infrastructure that are conducive to private sector investment.

With this in mind, Canada's new government is open to discussing fiscal matters with the project proponents when they are ready.

The future looks bright for the North. And resource-development projects will play an important role in Northern prosperity.

Besides the proposed MGP, the region has quickly become one of the world's leading producers of raw diamonds.

Political changes are also underway-in the form of devolution and the resolution of land claims.

To make the most of the opportunities presented by the North's energy reserves, several challenges must be overcome: shortages of labour and expertise, layered regulatory processes, remote locations, short construction seasons and fragile environments.

We all have roles to play in meeting these challenges. Industry, for instance, must recognize the advantages of hiring and training Aboriginal peoples and Northerners. Canada's new government must ensure that regulatory boards have adequate tools and resources.

This conference presents the perfect opportunity to learn more about the roles, responsibilities and perspectives of all the partners involved in oil and gas development in Northern Canada and Alaska.

It is also an important opportunity to establish contacts and develop long lasting relationships. By interacting we can better understand each other's positions and move forward together. As the newest player on the block, this is an important priority for me.

Finally, as the federal representative for the MGP, I can assure you that Minister Prentice and this government are confident that with the collaboration and cooperation of all parties we can and will develop the North's abundant resources in a sustainable , fair and profitable manner.

Thank you.

The government is confident that with the collaboration of all parties-governments, Northerners, private companies, Aboriginal organizations, regulatory and environmental review boards-we can develop the North's abundant resources in a sustainable, fair and profitable manner.

Thank you.

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