Posted Apr 30, 2014, 6:01 PM
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Join Date: Jun 2005
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Quote:
The Northwest Territories builds for its future
Julius Melnitzer | April 30, 2014 6:16 AM ET
The Northwest Territories has announced a 10-year, $600-million infrastructure upgrade plan to attract more resource development to the region. The building plans follow on “devolution” — Ottawa’s decision to give the Territories more powers and more responsibilities on how to govern itself.
But the Territories cannot expect special treatment from potential investors: resource companies will be evaluating the region’s prospects using criteria similar to the ones used to assess the viability of development in remote areas abroad, lawyers say.
“The checklist would be very much the same as it would be for places like Afghanistan or Brazil,” says Tom Valentine in Norton Rose Fulbright LLP’s Calgary office, who advises clients on frontier development around the world.
Infrastructure, Mr. Valentine cautions, is not the only, albeit an important, consideration for resource companies.
Indeed, the fundamental driver in the decision-making process is the resource base. “If you don’t have it in the ground, there won’t be any investment no matter what the territorial government does,” Mr. Valentine said. “Fortunately, using a CAPP [Canadian Association of Petroleum Producers] analysis, resource plays in the territory are becoming more attractive, particularly with respect to unconventional gas.”
Infrastructure and access to markets does, however, rank as the second most important focus. Currently, for example, investors prefer the Gulf of Mexico to British Columbia for LNG investment, largely because of the more advanced infrastructure in the U.S.
“The forward-looking approach of the territorial government is encouraging, as is the fact that the challenges associated with infrastructure in the Northwest Territories are lessening as technology develops with the passage of time,” Mr. Valentine said.
The territory’s geography, which does not demand a host of high-altitude crossings for roads and pipelines, is also advantageous for transportation infrastructure development.
The third criterion engages the fiscal regime.
“Even wonderfully attractive geology and good infrastructure and access won’t cut it if the fiscal regime is too onerous,” Mr. Valentine said. “But right now, I’m not sure the industry has a good enough handle on what the fiscal toolbox will look like.”
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http://business.financialpost.com/20...or-its-future/
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