January 04, 2018   By Edward Struzik

Northwest Territories Premier Bob McLeod was right when he issued a “red alert” in November and called for an urgent national debate on the future of the Northwest Territories. His peers, the premiers of Nunavut and the Yukon Territory, would be justified in calling for the same thing.

As housing, poverty and unemployment statistics show, Northerners are at a crossroads in their efforts to find a balance between a traditional way of life that puts country food on the table and one that provides basic goods, luxuries and economic opportunities that most southerners take for granted.

McLeod, however, was wrong in complaining about a “colonial” attack on the future of oil and gas development in the Arctic.

If the past tells us anything about the future, forging the Arctic’s future on fossil fuel development is not the way to move forward.

Leading energy experts have been saying this since 2006, when international energy consultants Wood Mackenzie and Fugro Robertson questioned “the long-considered view that the Arctic represents one of the last great oil and gas frontiers and a strategic energy supply cache” for the U.S. and Canada.

Sliding into the sea

In Canada, Arctic oil and gas has offered no significant returns since the late 1960s when the Canadian government engineered a plan to consolidate the interests of 75 companies with holdings in the Arctic. As a major shareholder in Panarctic Oil and Gas, and then Petro-Canada, the government used its resources, regulatory control and taxpayer money to encourage oil and gas exploration in the region.

Since then, government subsidization of Arctic oil and gas development has continued unabated at a very high cost.

Prime Minister Justin Trudeau and Bob McLeod, premier of the Northwest Territories, disagree over the future of Arctic oil and gas. 

THE CANADIAN PRESS/Sean Kilpatrick

In 2008, the federal government launched a program to bring petroleum geologists to the Arctic each year. To date, this program has spent nearly $200 million of taxpayers’ money to help the energy and mining industries find new sources of fossil fuels and minerals in the region with very limited success.

Another $16 million was spent to find ways to extract natural gas from methane hydrates in the Mackenzie Delta, a resource the energy industry has showed little interest in because of the technical and economic challenges associated with extracting it.

The recently completed $300 million Inuvik to Tuktoyaktuk Highway, built on rapidly melting permafrost, is another example of this misguided government strategy. According to a study done by the Northwest Territories government, it promises to save the town of Tuktoyaktuk $1.5 million in cost-of-living deliveries, and increase tourism — a good thing if it weren’t for the fact that the town of 900 is sliding into the sea.

Its main purpose, however, was to support energy development. It promises to deliver between $347 million and $516 million in increased cash flows from transportation savings over 45 years to resource companies operating in the Arctic.

The problem is that none of this Arctic oil and gas has ever made it to market, with one exception: A few shiploads of oil that Panarctic sent out from Melville Island in the 1980s.

Breaking even

Many have blamed the failure of Canada’s Arctic oil and gas strategy on Justice Thomas Berger’s Mackenzie Valley Pipeline inquiry in the mid-1970s.

Berger’s report recommended a 10-year moratorium on pipeline construction in the Mackenzie Valley so that First Nations could resolve their land claims with the federal government. It also led to the creation of a complex permitting process, which has slowed approvals for a more recent pipeline construction project.

The inquiry cast Berger as a symbol of environmental and social justice with his recognition of Indigenous rights.

Chief Justice Thomas Berger listens to testimony in March 1974 in Yellowknife at a federal inquiry into the development of a natural gas pipeline through the Mackenzie Valley. CP PHOTO

But the real reason why Arctic oil and gas has never made it south is because of the high cost of piping it over land or shipping it by sea to market.

The Mackenzie Valley Pipeline Project that Justice Berger considered in the 1970s was touted as “the biggest project in free enterprise history..”

Had it been built, it would have been an economic disaster. Bob Blair, the Calgary-based entrepreneur who wanted to build one of two proposed pipelines, suggested as much years later when he wondered why anyone would try again to ship Arctic oil and gas south.

The second Mackenzie Valley pipeline would have fared even worse. First proposed in 2004, the pipeline would have required gas prices to be in the range of $6 to $8 to break even.

That looked good in the years that followed when gas prices temporarily soared to nearly $15 in June 2008. Since then, however, the price has sat largely in the range of $2 to $6. The cost of the $20 billion pipeline would now need gas prices to triple from current rates to recoup its cost. That’s why Imperial Oil, its main proponent, received permission to delay the project until 2022 at the earliest.

In the meantime, Canadian governments have seemed oblivious to the fact that human-caused climate change — largely due to the burning of fossil fuels — is ending the Arctic as we know it. Since the 1970s, air temperatures in the Arctic have risen by as much as 5℃ and sea ice area has declined by about 12 per cent per decade.

The ripple effect

A warmer and shorter ice season means some polar bears have less time to hunt seals, and mosquitoes and flies have more time to take their toll on caribou, whose populations are at a historic low.

As sea levels continue to rise, powerful storm surges are causing massive saltwater intrusions, imperilling the freshwater lakes, wetlands and deltas that support tens of millions of nesting birds.

Soon low-lying coastal Inuit communities such as Tuktoyaktuk, sitting on rapidly thawing permafrost, will have to be relocated, like residents of the Alaskan community of Shishmaref have voted to do.

Rising sea levels and thawing permafrost threaten Arctic coastal communities, including Tuktoyaktuk, N.W.T, seen here in August 2009.

 (AP Photo/Rick Bowmer)

We are already seeing the rippling effects of some of these changes throughout the Arctic ecosystem.

Capelin, not Arctic cod, is now the dominant prey fish in Hudson Bay. Killer whales, once largely absent from the Arctic, are beginning to prey on narwhal and beluga, important food sources for the Inuit. Polar bears at the southern end of their range are getting thinner and producing fewer cubs. Trees and shrubs are overtaking tundra landscapes. Sub-Arctic forests are burning bigger, hotter and more often.

What the future holds for Inuit and First Nations peoples of the north, whose cultures grew out of a close association with this frigid world, is a puzzle.

Those cultures are already in a state of rapid economic reorganization and social readjustment. Most of these people continue to live in overcrowded houses. They have stopped or reduced their consumption of caribou, walrus and other Arctic animals, not because they prefer store-bought beef and pork but because the caribou populations are collapsing, and the receding sea ice makes it difficult for them to hunt marine mammals.

Steered by Northerners

What will the future Arctic look like? That is a wide-open question that can only be answered by debates steered by northerners.

Here’s a list of topics worth discussing. Oil and gas development isn’t one of them.

The Canadian Arctic needs an affordable and efficient air and road network that can bring in tourists and investors.

It needs museums to display artifacts — such as those in the recently discovered Franklin ships — that have been routinely shipped south.

It needs food security that goes beyond subsidizing the transportation of southern foods to the North.

It needs renewable energy to replace diesel, which is prohibitively expensive and polluting.

It needs a better form of post-secondary education that combines traditional knowledge with western scientific knowledge — and a way to convince its best students to stay home, instead of relocating to the south.

It needs a forward-looking ecological conservation plan that will ensure a future for polar bears, caribou, walrus, narwhal, beluga and other Arctic species.

THE CANADIAN PRESS/Nathan Denette

Prime Minister Justin Trudeau’s decision to temporarily ban future oil and gas exploration in the Arctic in December 2016 was a good start to setting a new course for the North.

So was Mary Simon’s report “A New Shared Arctic Leadership Model.” It makes 40 recommendations, many of which have been made several times in the past four decades.

Now it’s time to find new ways of moving forward with a road map to the future that will lead to economic advancement and improvements in the quality of life that Northerners long for and deserve.

The oil and gas industry has has tried and failed for more than 40 years to make a contribution. It doesn’t deserve to be part of this future.

Author:

Edward Struzik

Queen's Institute for Energy and Environmental Policy, School of Policy Studies, Queen's University, Ontario