Mr. Speaker, we are a territory rich in natural resources. Whether it is oil and natural gas, diamonds and other minerals, hydro potential, or the sheer natural beauty of our northern wilderness, I believe every region of the Northwest Territories has the potential to develop a strong economic base.
The Northwest Territories' Mackenzie Delta-Beaufort Sea region holds immense reserves of natural gas -- approximately 56 trillion cubic feet. At current prices, the region's estimated reserves could generate over $400 billion in revenue. Over the last two years, petroleum companies have bid approximately $650 million for Crown exploration licences in the region and an additional $76 million in the form of bid bonuses for Inuvialuit subsurface lands. Petro-Canada plans to drill an exploratory well in the region this month, following up the seismic program they conducted last winter. This will be the first well targeting natural gas to be drilled in the region. Other natural gas related activity in the region is in the form of seismic work -- six different companies are already engaged in this work this winter. It is expected that petroleum companies will spend over $80 million in the Beaufort Delta this winter, and employ approximately 400 people.
The current energy situation in Canada and the United States overwhelmingly demonstrates the need for a Mackenzie Valley pipeline. The demand for natural gas is increasing in North America as the current supply is decreasing. The Mackenzie Valley pipeline is clearly in the interests of southern consumers, residents of the Northwest Territories, and the country as a whole.
The pipeline would cross several regions of the Northwest Territories, from the Mackenzie Delta, through the Sahtu and Deh Cho and into the northern Alberta pipeline system. Construction of this pipeline will create an estimated 6,000 person-years of employment in the Northwest Territories during the three year construction phase. A standalone Mackenzie Valley pipeline could generate an additional $600 million in economic activity for the territory, creating enormous opportunities for northern businesses.
This year we provided $500,000 to the Aboriginal Pipeline Group to prepare a business plan for aboriginal equity participation in a pipeline. We will continue to support the Aboriginal Pipeline Group in its work on building business partnerships with industry to maximize the benefits of a Mackenzie Valley pipeline.
In addition to the potential for Mackenzie Valley pipeline development, the Sahtu region continues to experience substantial oil and gas activity. Oil production and drilling in the Norman Wells area continues. In addition, just last year, almost $60 million was bid for exploration licenses in the Central Mackenzie Valley. These funds should be spent in the area over the next four to five years.
In the Deh Cho, natural gas production continues in the Fort Liard area from five different wells. Later this year, a sixth producing natural gas well will be added. The search for resources in the area is still under way. In January of this year, work was being conducted on five different well sites. Estimates indicate that there is another 4 trillion cubic feet of gas to be found in the Deh Cho region. Production statistics show the region produced an average of 105 million cubic feet a day of natural gas last November. Using current prices, production is valued at approximately $770,000 per day.
Over the last year, industry has raised concerns about the regulatory environment in the Northwest Territories. The Government of the Northwest Territories has been encouraging regulatory bodies with jurisdiction in the Northwest Territories to address these concerns.
These agencies have met to lay the groundwork for a co-ordinated regulatory approach in the Mackenzie Valley. This could include joint assessment or co-ordination of the regulatory processes under the Inuvialuit Final Agreement, the Mackenzie Valley Resource Management Act and the National Energy Board. We will continue to encourage these boards and agencies to put in place a fair, predictable and efficient regulatory process.
Many Northerners may be wondering what lies in store for our economy given the uncertain economic conditions currently prevailing in Canada and the United States. In the short term, we do not expect to see any slowdown in the energy sectors, given the present demand and high prices, for all forms of energy throughout North America. The long-term outlook for the North's resources remains strong. Nevertheless, we must remain vigilant in monitoring economic conditions and their implications both for the Northwest Territories economy as a whole, and for the government's fiscal situation.
The Northwest Territories is in a position that is unique in Canada, and perhaps the world. We are beginning to experience significant new economic development opportunities while continuing to enjoy clean water, air and land, and abundant wildlife and fish. The right balance is urgently required as we continue to develop our economy. As we all know, the natural environment is a critical component of Northerners' cultural, social and economic identity. While the Government of the Northwest Territories is committed to renewable and non-renewable resource development, all development must be sustainable and satisfy certain key conditions. It must contribute to the long-term development of the northern economy, its benefits must accrue to the Northwest Territories, it must meet environmental standards, it must include local decision making, and it must be accompanied by appropriate environmental mitigation and monitoring measures.
As we have known for years, the North Slave region is clearly destined to become a producer of high quality diamonds rivalling the world's finest. The BHP mine has produced diamonds for over two years, with the value of 1999 production reaching almost $600 million. Diavik expects to spend approximately $500 million in 2001 to construct its Lac de Gras mine and anticipates production in 2003. Earlier this month, De Beers Canada confirmed its intention to develop Canada's first underground diamond mine at Snap Lake and has begun the environmental review process. Full production is anticipated in 2004. In five years, diamond mining in the Northwest Territories will employ approximately 1400 people and will be producing $2.2 billion worth of diamonds annually.
Furthermore, we do not just mine diamonds in the Northwest Territories. We cut and polish them as well. Three cutting and polishing plants already exist. Following negotiations with Diavik, Aber and De Beers, we anticipate an even greater diamond polishing capacity. We are confident that future discussion with our industry partners will result in continued growth in this sector. It is very likely that at least two more plants will be established in future years, which could raise employment in this field to 300 or more.
The Northwest Territories' potential to generate hydro-electricity is immense. The Taltson River, in the South Slave region, could produce an additional 200 megawatts and the Upper Snare could provide 20 megawatts of environmentally friendly power. We estimate that, using run of the river technology, the Bear River, in the Sahtu, has a potential to produce 800 megawatts, and the Mackenzie River, 2500 megawatts, all without flooding. As North America continues to identify the need for new energy sources, this places the Northwest Territories in a very promising position.
All regions have the potential to benefit from the growth of the tourism sector in the Northwest Territories. About $11 million is generated by the northern lights tourism business in Yellowknife alone. Globally, tourism is one of the fastest growing industries, and one in which the Northwest Territories has not come close to achieving its potential.
I do not want to understate the importance of the traditional economy to the residents of the Northwest Territories. This sector plays an important role in augmenting employment and income in our small communities. In a report about to be published by the Department of Resources, Wildlife and Economic Development, the economic value of our traditional economy -- trapping, hunting and subsistence fishing -- is estimated to be from one-third to one-half of the economic value of all renewable resource activities. The traditional economy is also responsible for substantial social and cultural benefits, and these make important contributions to community well-being.
Mr. Speaker, the economic opportunities in the territory are impressive, and they occur in all regions of the Northwest Territories. I can say with all conviction that our economic future has never looked brighter, but we need to acquire our fair share of resource revenues for reinvestment in people, infrastructure and economic diversification.