N.W.T. politicians keeping eye on ripple effects of shale oil development

CALGARY -- If an emerging oil deposit in the Northwest Territories winds up being as massive as many expect it to be, a local politician says it's going to take a lot of planning to make sure government services and regulatory oversight keep up with the resulting economic boom.

Norman Yakeleya, who represents the Sahtu region in the territorial legislature, likens what's going on in the area to corn kernels on a stove that's heating up.

"And then all of a sudden -- bang, bang, pop, pop. Pretty soon you have an explosion of everything," he said.

"We've got to prepare for this and we've got to get our numbers right here."

The Sahtu area in the central Mackenzie Valley is home to the Canol shale formation, which some estimate could contain between two and three billion barrels of oil.

Last winter, the region got a small taste of some of the ripple effects an oil and gas boom could bring.

Hotel rooms in the communities of Norman Wells and Tulita were booked solid, there were long lineups at gas stations and stores were short on supplies, said Yakeleya.

At the time, only early-stage exploration work was going on in the area, where industry has spent close to $630 million on land.

Yaleleya was part of a Northwest Territories government delegation that visited Calgary last week to hear from regulators and industry about hydraulic fracturing, or fracking.

Fracking involves injecting water, sand and chemicals at high pressure underground to free oil and gas from rock. The practice has unleashed huge amounts of energy from shale formations throughout North America, but it's also drawn the ire of environmentalists concerned about its impact on water.

The government paid for the trip, said organizer Doug Matthews, a Calgary-based consultant who has long worked on northern energy issues.

Industry groups hosted a somewhat similar trip earlier in the summer for rural Quebecers. Natural gas development has been halted in Quebec while the province weighs the pros and cons of fracking. Industry paid for that tour, though a few local politicians who participated covered their own costs.

The Northwest Territories' trip included sessions with Alberta and British Columbia energy regulators as well as with the National Energy Board, which oversees oil and gas development in the North.

The group also visited a drilling operation west of Calgary operated by Husky Energy Inc. (TSX:HSE), which plans this winter to evaluate two vertical wells it drilled a year earlier in the Sahtu, and a laboratory run by drilling company Trican Well Services Ltd.

Government officials have had meetings with environmental groups, too.

"It's important, I think, that the members of the assembly try to get a better idea of what's involved and what are the challenges," said Matthews.

Yakeleya said he went into the NEB meeting with a lot of questions about how drilling will be regulated.

"If this proves to be a great shale oil play and companies want to be there for a long, long time then the National Energy Board needs to catch up to the ball and keep up with it," he said.

"We need to have people in the Northwest Territories. Specifically, they've got to be in the Sahtu region to ensure that the public safety and concerns are taken seriously -- and we mean by opening up an office in the Sahtu."

David Ramsay, the territory's minister of industry, tourism, investment and transportation, also took part in the tour.

Remote aboriginal communities in the North have long struggles with unemployment, and oil and gas development could deliver a much-needed economic boost, he said in an interview just as the trip was beginning.

There hasn't been a "huge groundswell of opposition" in the Northwest Territories like there has been in Quebec and other areas.

Still, residents of the territory want to know what sort of environmental impact drilling could have -- namely water use and contamination from the fracking chemicals.

"The fuller the picture, the better the decision," he said.

The government is already having discussions about the ripple effects an oil-driven economic boom could have -- issues familiar to the oilsands epicentre of Fort McMurray, Alta.

"It's going to have an impact on our health-care system. It's going to have an impact on our schools. It's going to have an impact on policing and some other social concerns, and that's something as a government that we're going to have to pay close attention to," said Ramsay.

Northwest Territories Premier Bob McLeod said it works the other way, too. He said the energy development will help pay for badly needed roads, social services and infrastructure.

"Obviously all those things tie together. You get highways and we get oil and gas development, you see the cost of living decrease. There'll be more benefits not only to the Sahtu region, but the whole Northwest Territories and Canada," he said in an interview after meeting with Prime Minister Stephen Harper in Norman Wells last week.

"Like anything else, without development we won't get any additional resources to be able to provide for all of that type of infrastructure."

Yakeleya said, on balance, he supports opening up the Sahtu region to oil and gas development -- so long as it's done in a responsible, sustainable manner that allows residents to maintain their traditional way of life.

"People are smiling again and it's Christmas time in July and people now are looking at opportunities," he said.

"We're tired of having dusty roads in our communities. We want paved roads. We want to have nice houses. We want to have a good community and we want to show our young people it pays to go to school.

"We'll always have that dearly held value and belief that we are the protectors and stewards of the land," he said.

"At the same time we will always want to enjoy, like any other people in Canada, the wealth of the resource that we have."