Mr. Speaker, I have a return to written question asked by Mr. Yakeleya on October 26, 2004, regarding benefits from oil and gas exploration. I am pleased to provide the following response.
There are two types of benefits that could be attributed to oil and gas programs during exploration, development and extraction of the resource: direct and indirect benefits.
Direct Benefits
Direct benefits are in the form of financial revenues that accrue to federal, territorial and aboriginal governments such as royalties and taxes.
Total estimated direct financial benefit from the GNWT from oil and gas programs between 1999 and 2003 range between $20 million and $27 million. Total estimated direct financial benefit to the GNWT for 1999, 2000, 2001, 2002 and 2003 were $20 million, $27 million, $23 million, $24 million and $20 million, respectively.
The federal government is responsible for management of subsurface petroleum rights and, as such, accrues the royalties from oil and gas development. The estimated royalties accrued to the federal government oil and gas development in the NWT and Nunavut for 1999, 2000, 2001, 2002 and 2003 were $7.1 million, $13.4 million, $24.7 million, $24.2 million and $24.5 million, respectively.
However, there are currently no producing oil and gas fields in Nunavut, so all of these royalties can be assumed to be generated from NWT oil and gas operations. With regard to royalties that are generated from Sahtu operations, because there are a limited number of operations, it would be possible to identify information on a specific operation. Therefore, the federal government does not disclose this information as it would contravene federal legislation to ensure privacy.
Aboriginal governments in the NWT, as per their land claim settlement agreement, receive a certain portion of the royalties received by the federal government from resource development in the NWT. For instance, the Sahtu receives 7.5 percent on the first $2 million of resources royalties and 1.5 percent of resource royalties in excess of the $2 million.
Indirect Benefits
The most tangible indirect benefits that the NWT and its residents accrue are the employment, training and business opportunities created by oil and gas development during exploration, development and extraction of the resource.
For instance, in the 2004-05 winter season, oil and gas companies budgeted about $100 million to spend on oil and gas projects in the Sahtu region. Active companies included Apache Canada Ltd., PetroCanada Inc., Devlan Resources Ltd., Northrock Resources Ltd. and Colt/KBR Engineering Corporation. About 530 individuals were employed. It can be assumed that a portion of the budget was spent in the NWT and some of those employed are NWT residents and aboriginal people.
Further, 62 individuals from the Sahtu region, out of 109 in all of the NWT, received training relevant to employment
in the oil and gas sector during the period April to December 2004.
In summary, oil and gas exploration programs provide jobs and contribute some financial benefits to the GNWT. As well, these programs create opportunities for new oil and gas field discoveries. Such discoveries will benefit future generations. Thank you, Mr. Speaker.