GNWT Department of Finance

R(15)231105202

YELLOWKNIFE (November 23, 2005) – Premier Joe Handley and Finance Minister Floyd Roland are offering strong encouragement to industry to proceed to the public hearings phase of the environmental assessment and regulatory process for the Mackenzie Gas Project. The Premier and Minister Roland sent a letter of support to the project proponents confirming the intentions of the Government of the Northwest Territories to develop a stable fiscal regime for the project.

“Considering the size of the investment – an estimated $7 billion – it is understandable industry would want some level of assurance that governments are not going to change the rules substantially once the investment is made,” said Minister Roland. “This letter clearly communicates our intention to work with industry and the federal government to ensure the Mackenzie Gas Project (MGP) proceeds.”

Imperial Oil Resources Ventures Limited, as the lead proponent for the development of the MGP, has stated that progress on access and benefits agreements with Aboriginal organizations, and some assurances regarding the project’s fiscal regime, are required before making the decision to proceed to the public hearings phase of the regulatory process.

The GNWT continues to call on the federal government to address the related issue of resource royalty sharing. The federal government has a responsibility to ensure the people of the Northwest Territories will benefit fairly from revenues generated from this important project. This is a fundamental principle that the Prime Minister has recognized in other agreements such as the Newfoundland and Labrador and Nova Scotia Offshore Accords.

“A fair devolution and resource revenue sharing agreement with the federal government will bring Northerners the fiscal certainty required as we move ahead”, said Premier Handley, “It is critical the federal government recognize and address our situation and negotiate a fair agreement ensuring Northerners benefit from revenues generated from resource development in the Northwest Territories. In the meantime, we need to manage the areas we do control to ensure a secure economic future and an environmentally responsible project for northern people and governments.”

The federal and territorial governments exercise control over the royalty regime for the MGP, and discussions with between government and industry were initiated earlier this year. The GNWT’s letter to industry outlines the GNWT’s intention to work towards a memorandum of understanding regarding the current and post-devolution royalty regime for the project. Key to achieving this memorandum is the analysis of all potential fiscal scenarios for the MGP, including those in a post-devolution scenario.