Achieving a Win-Win From Oil and Gas Developments in the Northwest Territories

The discussion paper, At a Crossroads: Achieving a Win-Win From Oil and Gas Developments in the Northwest Territories, reviews and evaluates the Frontier Lands Petroleum Royalty Regime, the system for awarding lease rights for oil and gas, and opportunities for the Government of the Northwest Territories to capture revenue from oil and gas developments in the Northwest Territories (NWT) with a view to achieving a win-win development scenario for oil and gas developments in the territory. A two-page summary fact sheet is also available.

A win-win development scenario would allow companies to earn a fair return on their investment while providing maximum benefit for resource owners today and in the future. The oil and gas resources in the NWT are owned by Canadian citizens. The government of Canada manages those resources on behalf of Canadians. In their role as manager, the government grants companies the right to development oil and gas resources. Companies incur costs and earn a profit on the resources they produce and sell. The government is then responsible for capturing revenue from oil and gas companies to ensure appropriate compensation for resource owners (Canadians), while allowing companies to earn a fair return on their investment.

To accomplish the win-win, the federal government needs to review and reform royalty rates and the bidding process for awarding oil and gas leases to capture maximum revenue from oil and gas developments. At the same time, the Government of the Northwest Territories (GNWT) needs to take advantage of available tax options to obtain revenue for oil and gas resource owners in the territory. 

A portion of the revenue from oil and gas developments in the NWT should be invested in a long-term fund to be shared with future generations. This fund could: 

• help mitigate the impact of resource developments;
• provide a store of wealth for future generations (who won't benefit directly from the resources developed today);
• diversify and strengthen the territorial economy; and
• provide financial capital to shift the Canadian economy away from fossil fuel dependence and toward renewable energy sources.

It is critical that the current regime be reviewed through an open and transparent public process that is done for the resource owners by the resource owners. The resource revenue review process should involve consultation with Aboriginal organizations and governments, territorial governments and other Northerners; provide opportunity for public input and comment; and be supplemented by public education materials.

For more information, read the full report,  At a Crossroads: Achieving a Win-Win From Oil and Gas Developments in the Northwest Territories.