Alaska Natural Gas Pipeline Project: The Canadian Perspective

Sue Kirby Assistant Deputy Minister Energy Sector – Natural Resources

Presentation to Interstate Oil and Gas Compact Commission

May 5, 2008

1 Presentation Outline

ƒ Canadian energy policy framework

ƒ The need for, and benefits of Alaskan gas

ƒ Government of Canada preparations

2 Canadian Energy Policy ƒ Shared jurisdiction ƒ Cooperation with provinces and territories ƒ Respects the rights of First Nations ƒ Federal focus – interprovincial and international ƒ Market orientation ƒ New emphasis on regulatory efficiency ƒ Focused interventions ƒ Sustainable development & environmental protection

3 Canadian Pipeline Policy ƒ Guiding Principles ƒ Project management approach ƒ Modern regulatory regime ƒ Support Aboriginal economic development ƒ Ensure Canadian benefits are realized ƒ Market-based approach

4 North American Natural Gas Outlook ƒ Rising demand ƒ Economic growth and power generation ƒ Declining domestic supply ƒ Conventional basins are in decline ƒ Need for new natural gas ƒ ƒ Frontier and unconventional gas ƒ Alaska and Mackenzie

5 North American Benefits of Alaska Gas ƒ Alaska has large natural gas reserves ƒ 35 Tcf proved reserves in Prudhoe Bay ƒ Potentially 100 Tcf, or more, of additional resources ƒ Stable domestic supply source ƒ Moderating force on gas prices ƒ Positive employment and GDP effects ƒ Expanded pipeline infrastructure and potential development of new resources along pipeline route

6 Canadian Benefits from Alaskan Gas ƒ Benefits to Canada depend on project configuration: ƒ Northern development ƒ Enlarged hub ƒ Commercial access to ethane ƒ Canadian/North American sourced steel ƒ Engineering and construction participation ƒ Provincial / federal tax revenues

7 Alaska Gas and Canadian Pipelines ƒ Declining Western Canadian Sedimentary Basin supply ƒ Rising Alberta natural gas demand (e.g. oil sands) ƒ Spare capacity on several major Canadian pipelines ƒ Less utilization means higher pipeline tolls ƒ Spare capacity at ethane extraction facilities ƒ Alaskan gas could refill capacity, lowering tolls ƒ Benefits all producers and consumers

8 Alaska Gas Pipeline – Commercial Parties ƒ Two commercial parties have pipeline proposals to move Alaskan gas through Canada ƒ TransCanada/Foothills – under the NPA ƒ ConocoPhillips/BP – under the NEB ƒ Both projects must clear their own hurdles ƒ NRCan continues to monitor developments and prepare for any eventuality ƒ Preference for private resolution to commercial dispute

9 Canadian Regulatory Regimes ƒ Ultimate review process depends on project that emerges ƒ Canada is committed to ensuring an efficient and effective regulatory review process under any project outcome ƒ NEB and NPA review timelines are in line with expedited US review ƒ Government of Canada is reviewing all relevant acts and legislative requirements ƒ Regardless of review process, coordination will be required

10 Government of Canada – Project Management ƒ Minister Prentice (Industry Canada) is lead minister ƒ NRCan coordinates all aspects of the Alaska file ƒ Interdepartmental steering committee ƒ Environmental Assessment and Regulatory working group is actively engaged ƒ Project certainty will warrant other working groups, e.g. ƒ Aboriginal engagement ƒ Benefits, socio-economic impacts ƒ Science requirements

11 Provincial / Territorial / US Governments ƒ NRCan maintains regular contact with , BC and Alberta ƒ Interests include: ƒ Yukon: exploration, market access ƒ Alberta: hub integration, commercial liquids access ƒ BC: employment opportunities ƒ Regular bilateral meetings with US government ƒ Participating in Drue Pearce’s gap analysis/readiness exercise

12 Importance of First Nations ƒ Alaska pipeline will cross traditional lands of Aboriginals in Yukon, BC, and possibly Alberta ƒ Constitutional duty to consult Aboriginal peoples ƒ Aboriginal support is critical ƒ Government of Canada is proactive in early aboriginal engagement and committed for the duration of the project ƒ Already conducted three Aboriginal workshops in the Yukon

13 Conclusion: The Canadian Perspective ƒ Government of Canada supports the Alaska highway pipeline

ƒ Many benefits for Canada and North America

ƒ Government of Canada is actively preparing for project

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