A Richard Rohmer Omnibus. Richard Rohmer

      Gunther paused a moment, took out his handkerchief again and wiped his face and bald head. He was now perspiring profusely, but he struggled on, reading from his notes.

      “Most of the gas reserves are held by Panarctic, which is a Canadian-controlled company, as I am sure you are all aware. It was formed in 1968 because the Canadian government was afraid that exploration wouldn’t go forward in the Arctic without some incentives. It is 45 per cent owned by the government of Canada, 10 per cent by Canadian corporations such as Canadian Pacific Investment, and 45 per cent by foreign corporations. At no time have any shares of Panarctic been made available for purchase by the Canadian public — unfortunately.

      “When Panarctic started to hit in 1970 with its first discovery well at Drake Point on Melville, and a later find on King Christian Island, American interests quickly appeared on the scene. Gas distribution firms in the U.S. quickly saw there was going to be a major supply on the Arctic Islands and they wanted to be there for a piece of the action. It was clear there was going to be an enormous shortage of natural gas, and they were anxious to advance exploration money to Panarctic in return for the right to purchase the gas when it was discovered. And that’s what they’ve done. Tenneco of Houston, Columbia Natural Gas and other gas distributors have advanced Panarctic interest-free money repayable only in the event that gas is produced. Within three years of the first discoveries, the Panarctic shareholders had put up $101-million, while the American group had invested over $75-million. Since that time, the capital input by Panarctic has remained at $101-million, but now the American investment is over $500-million.

      “It can be said that because Tenneco and its associates have the first right to negotiate for the gas discovered by Panarctic, and because they have put up the lion’s share of the capital … it can be said the American firms in effect own the gas in the ground. They own it, but they have to get permission to take it out and transport it to market.

      “Now I’d like to return to the question of a continental energy policy, touched on by the Minister of External Affairs. During the Nixon administration, the Americans decided that an over-all policy concerned with all available forms of energy was essential throughout North America. They pointed out that since the United States and Canada occupy the same continent, and since the United States had in effect paid for the discoveries made in the Canadian Archipelago, it made sense to have an agreement regarding the distribution of the products resulting from those discoveries.

      “For the Americans, a continental energy policy meant that Canada would share all of its energy resources with the United States, which in turn meant that we would have to share the shortages as well. When the President says that Canada has refused to agree to make available to the United States the Arctic Islands gas, he is not correct. What we have refused to do is enter into a continental energy policy agreement, of which gas would only be a part. I am of the firm view that if negotiations had proceeded on the basis of gas alone, the Americans could have had a commitment for the Arctic reserves long ago, and the transportation system would have been well on its way by now.

      “In a way, Canada has been fortunate that an agreement wasn’t reached. Up until the middle of the last decade, we were practically giving our gas and oil away. To obtain exploration rights in the Mackenzie Delta and the Arctic Islands, a company was only required to put down a deposit of between 5 cents and 25 cents per acre. Then, if drilling was successful, it would pay a royalty of 5 per cent on all production for the first five years (if the find was north of latitude 70 degrees) and 10 per cent thereafter, or (if the find was below latitude 70 degrees) 5 per cent for the first three years and 10 per cent thereafter. Anyone can see that this works out at not much more than bank interest on the capital which had been given away in the ground. Thus Canada stood to gain practically nothing from the sale of oil and gas.

      “Compare that kind of giveaway with what the Middle East countries have done and are now doing in terms of retaining ownership of the fossil fuels in the ground and taxing the product. With royalties, taxes and payment money, they get a return of between five and six dollars a barrel for oil which costs twenty cents to produce. It’s little wonder that the Middle East and Mediterranean members of OPEC have become among the richest nations in the world with very little effort. In fact, the control of billions upon billions of American dollars, in the hands of the leaders of these countries, has enabled them to manipulate the American dollar in world markets and cause serious changes in the value of the dollar from time to time.

      “Fortunately Canada has smartened up a bit in its dealings. We have issued new leases covering the drilled acreage in the North. Under the new terms, a fair share of the proceeds of the sale at well-head will go to the Canadian people, in export taxes and a royalty of 25 per cent on all production in the Islands and the Delta. The U.S. oil and gas companies have been extremely annoyed at the new terms, but for Canadians they could provide a return of 50 per cent of the market price of the gas, and in effect a yearly income equivalent to all federal expenditures. Thus it is certainly in Canada’s interests to arrange for the export of these resources, provided Canada’s future needs are protected.

      “Now I see my time has just about run out. Perhaps I can answer one question.”

      Gunther took one of the notes which had been left beside the lectern on the table. “Why shouldn’t Canada enter into a continental energy agreement with the United States?”

      “Well, I can’t answer for the previous administrations, and I may not be able to answer for this one. …” He glanced down toward the Prime Minister.

      Robert Porter stood up. “If I may, I’ll answer that question for Mr. Gunther. It is a most difficult one. I don’t want him to bear a responsibility which he should not have.

      “It boils down quite simply to a question of sovereignty. If Canada is to remain an independent nation with its own goals and objectives and a political and judicial system quite different from that of the United States, then it is clear that we must be as free as possible to plan our own economic development and in particular the use to which our natural resources, especially those which are nonrenewable, are put. It is apparent to all of us that we already live in the economic and cultural shadow of the United States. As a result, it is most difficult at times to maintain a position of independence.

      “If we should agree to a continental policy on all sources of energy, it is clear that we would then have to share the United States’ shortages. The Americans are dependent now on foreign imports for 60 per cent of their energy. Canada is self-sufficient. If the two countries were to merge their interests in energy, Canada would join the United States in being largely dependent on offshore suppliers. This would undoubtedly make us even more vulnerable to economic domination from abroad, and we would find it almost impossible to maintain our independence. For these reasons, Canada has taken its present position, and I can see no reason for changing at this moment, although I must confess that with the ultimatum now handed to us by the President, it is very likely that we can expect other pressure to be applied.

      “Clearly, what is at issue is not so much the access to the energy reserves of the Canadian Arctic as the whole question of an independent future for Canadians.”

      Air Force One / (Resolute Bay)

      7:57 a.m., CDT

      The President settled down in his favourite spot, the captain’s seat in the Boeing 747, Air Force One. He had just taken off from Resolute Bay for Washington.

      Things were moving on schedule. This early morning start should get him back into the White House before three o’clock in the afternoon. It was not to be a direct trip, however. He had one more visit in mind.

      They were climbing sharply, headed south over the Northwest Passage. Suddenly the President pulled back the power and levelled off at 2,000 feet. And then, smiling to himself at the startled glance Colonel Mike Wypich threw his way, he turned the big bird in a slow arc to proceed east down the Passage.

      Answering