Mr. Speaker, I have a Return to Written Question asked by the Member for Mackenzie Delta on June 24, 2016, to the Minister responsible for the Northwest Territories Housing Corporation regarding heating issues related to the Joe Greenland Centre.

The Joe Greenland Centre is heated by an oil-fired hydronic boiler heating system. The total incremental cost of electricity due to the use of space heaters by elders in the Joe Greenland Centre from September 1, 2015, to June 1, 2016, was $1,440. This was due to four units in service during this time frame, with an incremental cost of $40 a month per unit.

Regarding the cost to install additional radiators in the facility, a contract has been awarded for $77,000 to complete the repairs. This work is scheduled to be completed by the end of October 2016. As the Joe Greenland Centre had an energy efficient heating system installed, the Northwest Territories Housing Corporation did not undertake a feasibility study for biomass heating.

With an energy efficient heating system in place, the payback from a biomass heating system investment is expected to be much longer. The Northwest Territories Housing Corporation is open to considering a wood pellet heating system for this facility in the future, based on a sound business case and available funding.

Mr. Speaker, I have a Return to Written Question asked by Mr. Thompson on June 29, 2016, regarding Capital Contracts on Highway No. 1.

Later today, at the appropriate time, I will table a document from the Department of Transportation indicating the annual budget for capital projects delivered on Highway No. 1 in the Nahendeh constituency, including the ice crossings, since 2011-2012.

The document will include a list of companies that were awarded capital contracts and a description of the Government of the Northwest Territories contract award process. It will also include the number of companies that requested and received negotiated contracts between November 2015 and June 2016.

Mr. Speaker, I have a Return to Written Question asked by Ms. Green on June 29, 2016 regarding the 2014-2015 Public Accounts.

1. Can the Minister confirm that Government spending on infrastructure exceeded the operating surplus, as per page 8 of the non-consolidated public accounts?

I can confirm that the Government of the Northwest Territories (GNWT) spending in 2014-2015 on infrastructure did not exceed the infrastructure financing provisions of the Fiscal Responsibility Policy (FRP). The Government achieved sufficient cash from the operating surpluses during the 2014-2015 fiscal year to finance at least 50 per cent of capital expenditures. Later today, at the appropriate time, I will table a document showing how the GNWT complied with the FRP.

1. What are the consequences for Government not adhering to its own fiscal responsibility policy by failing to finance infrastructure from 50 per cent of the operating surplus?

The FRP is focused on committing the GNWT to prudent borrowing to ensure long-term fiscal sustainability. If the GNWT did not achieve sufficient cash from operating surpluses to finance 50 per cent of infrastructure investments in a fiscal year, the GNWT would be required to adopt a fiscal strategy to ensure sufficient operating surpluses were achieved over the subsequent two fiscal periods to bring the GNWT back into compliance.

1. What is the cost of the additional borrowing required for infrastructure funding?

The GNWT would have had to borrow approximately $56 million to fund infrastructure projects in 2014-2015. Given that the GNWT incurs short-term borrowing to have sufficient cash for operations and fund infrastructure investment, the actual cost of borrowing the $56 million can only be estimated. Assuming that the $56 million was borrowed in equal installments over the 12-month period, the estimated borrowing costs would be approximately $325,000.

1. Can the Minister commit to make the reporting on adherence to the fiscal responsibility policy available in plain language within three months of the review of the public accounts?

A plain language report on the GNWT adherence to the FRP will be included in the Public Accounts.

Mr. Speaker, I have a Return to Written Question asked by Mr. O'Reilly of the Minister responsible for the Office of the Regulator of Oil and Gas Operations on June 29, 2016 regarding horizontal fracturing emissions, fluids and inspections.

Mr. Speaker, as there is no ministerial portfolio known as Minister responsible for the Office of the Regulator of Oil and Gas Operations, I am exercising my prerogative as Premier and taking it upon myself to provide a response to Mr. O'Reilly's questions. For future reference, I would suggest that questions concerning the operations of the Office of the Regulator should be directed to the Minister of Industry, Tourism and Investment as the Minister responsible for the Oil and Gas Operations Act.

1. The quantity of greenhouse gas emissions due to flaring and for how many days flaring occurred?

The Regulator is now able to supply the information requested. Section 67 of the Oil and Gas Drilling and Production Regulations prohibits flaring unless it is authorized by the Regulator, or necessary in an emergency situation. ConocoPhillips received authorization from the National Energy Board, the oil and gas regulator before devolution, to flare from the E-76 and P-20 wells, the two wells that were horizontally fractured.

Flaring can be necessary when there is no infrastructure to transport produced gases to market, including gases produced from the testing of a well. It also reduces the greenhouse gas potency of methane, which is up to twenty-five times more potent than carbon dioxide as a greenhouse gas.

Dodo Canyon E-76:

Flaring occurred at the Dodo Canyon E-76 well from March 2, 2014 to March 20, 2014 (18 days). The total volume flared was 1,595 E3m3, which resulted in flaring direct C02e (carbon dioxide equivalent) emissions of 4,074 tonnes.

Mirror Lake P-20:

Flaring occurred at the Mirror Lake P-20 well from March 17, 2014 to April 4, 2014 (18 days). The total volume flared was 1,628 E3m3, which resulted in flaring direct C02emissions of 4,156 tonnes.

1. The total volume of fracking fluid used, fracking fluids recovered and fracking fluids left in the ground.

OROGO is a participant in FracFocus.ca, as was the National Energy Board at the time the E-76 and P-20 wells were drilled. The water volume and hydraulic fracture fluid composition for each well was reported to FracFocus.ca.

Dodo Canyon E-76:

The total load fluid (fluid injected into the well) for the Dodo Canyon E-76 well was 6,586 m3. The load fluid consisted of 15% HCl acid, fracture water (fracking fluid) and fresh water. 96.5% of the load fluid, or 6,355.5 m3, was fracking fluid. The total load fluid recovered was 1,780 m3. The fracturing occurred in the targeted petroleum producing zone at a depth of 1790m (about 5,873 feet) from the surface.

Mirror Lake P-20:

The total load fluid for the Mirror Lake P-20 well was 7,920 m3. The load fluid consisted of 15% HCl acid, fracture water (fracking fluid) and fresh water. 95.5% of the load fluid, or 7,563.6 m3, was fracking fluid. The total load fluid recovered was 1,857 m3. The fracturing occurred in the targeted petroleum producing zone at a depth of 2,019m (about 6624 feet) from the surface.

1. Activities carried out to monitor the condition of well casings including details and results of any plan for the continuous monitoring of well casing integrity and measures to detect leakage.

Mirror Lake P-20 and Dodo Canyon E-76 were drilled and completed under the regulation of the National Energy Board, prior to April 1, 2014. Section 39 of the Canada Oil and Gas Drilling and Production Regulations then in effect for these wells, contain specific requirements for the design of well casings, including the requirement that they be "designed so that the anticipated conditions, forces and stresses that may be placed on them are withstood ... and that the integrity of... potable water zones, is protected."

Further, section 43 requires an operator to "ensure that the casing is pressure-tested to the value required to confirm its integrity for maximum anticipated operating pressure."

The same requirements are mirrored in the territorial Oil and Gas Drilling and Production Regulations.

When the wells came under the jurisdiction of the GNWT Regulator of Oil and Gas Operations on April 1, 2014, they were already shut in.

Between January and March 2016, ConocoPhillips abandoned (permanently plugged and cut and capped) these two wells, along with two other petroleum wells and three groundwater monitoring wells regulated by the GNWT Regulator of Oil and Gas Operations. These activities were authorized by the Chief Conservation Officer and were monitored and inspected by staff of the Office of the Regulator of Oil and Gas Operations (OROGO). During the approximately two months of abandonment operations and subsequent follow-up, OROGO conducted four inspections over a total of 8 days and one non-inspection site visit.

Section 57 of the

Oil and Gas Drilling and Production Regulations

requires that operators monitor and inspect suspended wells. No such requirement is in place for wells that have been abandoned in accordance with the regulations. However, section 57 of the regulations puts an ongoing responsibility on an operator to ensure that a well is left in a condition that prevents leakage.

Likewise, there is no legislated mandate for the Regulator to continuously monitor or inspect wells that have been abandoned in accordance with the regulations. However, OROGO has recently launched a voluntary program, Well Watch, which encourages local land users to contact OROGO directly if they notice any changes in the status of old abandoned wells. OROGO will follow up with the community, conduct any necessary inspections and identify the organization responsible for any repair work.

1. Any results from the annual surface and ground water monitoring, indicating changes to the ground water and surface water quality, as a result of the ConocoPhillips horizontal fracturing program.

The Sahtu Dene and Metis Comprehensive Land Claim Agreement gives the Sahtu Land and Water Board (SLWB) primary responsibility for regulating land and water use, and conserving land and water resources in the Sahtu Settlement Area.

ConocoPhillips' surface and ground water monitoring reports are submitted to the SLWB, as a condition of the water licence associated with the project. These annual reports are available on the SLWB's public registry at http://mvlwb.com/mvlwb/resources/corporate-documents

What monitoring and inspection takes place to verify the contents of the surface and ground water monitoring plan reports submitted annually by ConocoPhillips.

Surface and groundwater monitoring reports are a requirement of the ConocoPhillips' water licence, issued by the SLWB. Monitoring and inspection activities are carried out by the Department of Environment and Natural Resources.

Please be advised there is no Ministerial portfolio known as Minister Responsible for the Office of the Regulator of Oil and Gas Operations and for future reference I would suggest that questions concerning the operation of that office be directed to the Minister of Industry, Tourism and Investment, as the Minister responsible for the

Oil and Gas Operations Act.

Finally, Mr. Speaker, I have a Return to Written Question asked by the Member for Kam Lake on June 29, 2016 to the Minister of Finance regarding small business taxes.

1. Over a ten-year average, how many small business are operating in the Northwest Territories and how many do not pay taxes based on GNWT tax regulations?

Response:

For NWT tax purposes, a small business is usually defined as a company owned by Canadians with capital investment of less than $10 million and with shares of the company not traded on a stock exchange. A small business receives preferential tax treatment in that its business profit (taxable income) up to $500,000 is subjected to a lower corporate income tax rate of 4 per cent instead of the general corporate income tax rate of 11.5 per cent.

The amount of the active business income limit for the small business corporate tax rate has changed three times since 2004 and therefore a ten year average would not compare the same data set of small businesses. The current business limit of $500,000 is unchanged since 2009. Therefore, the response is restricted to the five year period from 2009 to 2013, which is the latest data available.

Using the 2009 to 2013 average, the NWT has 1,853 small businesses including those operating as not for profit organizations. About 1,009, or 54 per cent, of these businesses do not pay NWT corporate income tax.

1. Can the Minister provide details of the policies, legislation and any additional regulations that permit small businesses in the Northwest Territories not to pay taxes?

Response:

There are no policies, legislation or regulations that permit small businesses to not pay taxes when they are profitable. Businesses in the NWT are subject to the federal Income Tax Act and the NWT Income Tax Act and both provide preferential income tax treatment to small businesses. NWT legislation provides preferential income tax treatment to small businesses, where the first $500,000 of active business income earned by these small businesses is subject to the 4 per cent small business tax rate. Income over this threshold is subject to the 11.5 per cent general corporate income tax rate.

If a small business is not paying taxes it is because it is not generating taxable income. This is the case if its revenue generated for the year is fully offset by allowable business deductions and credits. Further, when the business incurs a loss for the year, it is allowed to use the loss to reduce tax paid back three years or carry the loss forward and apply it against future profits for up to 20 years.

1. What is the projected impact on government revenue over a ten-year average of a reduction of one per cent to the lower corporate income tax rate?

Response:

The small business tax revenue yield is fairly stable. Reducing the small business tax rate from four per cent to three per cent would generate a potential average annual GNWT revenue loss of $700,000.

1. What is the projected impact on government revenue over a ten-year average of a reduction of two per cent to the lower corporate income tax rate?

Response:

Reducing the small business tax rate from 4 per cent to 2 per cent would generate a potential average annual GNWT revenue loss of $1.4 million.

1. What is the projected impact on government revenue over a ten-year average of a reduction of one per cent to the higher corporate income tax rate?

Response:

Reducing the general corporate income tax rate from 11.5 per cent to 10.5 per cent would generate a potential average annual GNWT revenue loss of $5.3 million based on a ten-year average; however, corporate income can fluctuate significantly and the potential losses over the ten year period (2005 to 2014) from a one per centage point reduction in the general corporate rate would have ranged from $3 million to $9 million. Thank you, Mr. Speaker.