NEWS BULLETIN

August 22, 2001 --- Vol. 7, No. 103August 2001

Phillips now a Point Thomson working interest owner

Letters from the Point Thomson unit owners to the state have been from ExxonMobil Production Co. on behalf of itself, BP Exploration (Alaska) Inc. and Chevron U.S.A. Inc.

Recently, however, the "on behalf of" list has started to include Phillips Alaska Inc. Phillips Alaska is being included because it purchased 1 percent of the Point Thomson field earlier this year and has exchanged land with other working interest owners for an additional 4 percent interest according to corporate filings.

A Chevron official told PNA, "we have reached a four-way alignment on Point Thomson. BP, Chevron, Phillips and ExxonMobil. We are in the process of redrafting the Point Thomson operating agreement to expedite development of the unit."

The Chevron official also said that Phillips' 5 percent ownership is a working interest.

Planned protest by British Columbia oil workers fizzles out

A protest aimed at slowing traffic on the Alaska Highway in support of an aboriginal blockade at a Petro-Canada natural gas site in northeastern British Columbia has ended before it began.

Wayne Harvey, a winter oilpatch worker, said he and more than 100 industry employees would distribute pamphlets on the highway supporting the Native cause and suggesting Petro-Canada should withdraw from the area.

He said the demonstration was called off after he had discussions with Petro-Canada and Bernie Metecheah, chief of the Halfway River First Nation that initiated the blockade.

Harvey said Petro-Canada indicated it would take steps this week to deal with Halfway River's concerns and end the blockade.

A spokesman for Petro-Canada said he did not understand what Harvey was referring to and was unaware of any company promises to the Halfway River leaders.

"I can say Mr. Harvey's opinions do not factor into the discussions between Petro-Canada and the Halfway River First Nation," the spokesman said.

Kakfwi pledges firm Mackenzie gas proposal by fall

Northwest Territories Premier Stephen Kakfwi has pledged that the Canadian government will have a firm proposal by the fall for shipping gas from the Mackenzie Delta to southern markets.

He gave the assurance in a Yellowknife meeting on Tuesday with Prime Minister Jean Chretien, insisting that some aboriginal opposition to current pipeline plans won't stand in the way.

"Some aboriginal groups have said: 'We support (a Mackenzie Valley pipeline).' Then a year later they have said 'We're not sure.' It brings a credibility problem." He said those aboriginal communities that want to proceed with a pipeline aren't interested in reluctant partners.

"If they don't support it, they don't need to be involved," Kakfwi said. "It is their choice."

He reiterated his long-held view that Canadian gas should get priority over Alaska gas in being shipped through Canada to the Lower 48, saying Chretien "expressed that sentiment a number of times. We want to make sure our gas is not stranded and given less priority than Alaskan gas."

Kakfwi also told Chretien he would like to see a new revenue-sharing deal between the federal and NWT governments before a pipeline is constructed. Both sides are expected to agree on the terms of reference this fall for directing a portion of the revenues that have gone exclusively to federal coffers to the NWT.

Kakfwi expressed the hope that a deal can be struck within two years, but stressed the NWT is ready to settle for two-thirds of the C$850 million expected to be generated over the next 20 years.

"It is not envisaged at this time that the 40,000 people in the NWT will get to keep all of the revenue and royalties from resource development. We feel we will be sharing that with Canada," he said.

Chretien rejects using energy as a weapon lumber fight with United States

Canadian Prime Minister Jean Chretien said he has bluntly warned President George W. Bush that the United States can't have it both ways on free trade, securing greater supplies of Canadian oil and gas while imposing tariffs on softwood lumber.

"You want gas, you want oil and you don't want wood?" Chretien said he told Bush in a Monday phone call. "It's too bad, but if you have free trade, you have free trade. And I explained it very clearly."

Chretien later said he is not trying to link energy and lumber in a trade war. "There is no need for that," he said. But two of his senior cabinet ministers, Fisheries Minister Herb Dhaliwal and Trade Minister Pierre Pettigrew, had earlier issued veiled threats that Canada might take a hard line on C$50 billion a year in energy exports unless the lumber dispute was settled.

Dhaliwal said the United States would not get cooperation on routing a gas pipeline from Alaska through Canada if it continued with plans to impose a 19.3 percent tariff on softwood lumber. "If the Americans don't want to buy our lumber ... I don't know if we want to let them pump gas from Alaska to the southern 48 states," he said. "Either we have free trade or we don't."

Pettigrew said Canada has "heard what (the Americans) are saying on the energy front and I am saying that it is up to them to realize that keeping us in a good mood is a good idea. You don't hit a guy with a two-by-four on the forest front before asking him for help on the energy front."

However, Chretien, following a meeting with Alberta Premier Ralph Klein, said he would not endorse any threat to withdraw co-operation on the gas pipeline. "It's a war when you do that ... I believe in taking a file and resolving a file," he said. Klein and petroleum industry leaders told Chretien it would be "disastrous" for oil and gas exports.

J.C. Anderson, chairman of Anderson Exploration, said it would be "madness" to restrict any aspect of Canada's energy trade with the United States, while Gwyn Morgan, chief executive officer of Alberta Energy Co., said any retaliation through energy would be "imprudent in the extreme."

Andre Plourde, an energy economist at the University of Alberta, said a get-tough approach over energy would likely fail, given that the North American Free Trade Agreement prevents Canada from curbing energy exports unless it cuts supplies proportionately in Canada.

The U.S. Commerce Department, arguing some Canadian lumber producers are illegally subsidized, has threatened to impose a 19.3 percent duty on C$10 billion a year in softwood sales, retroactive to May 19, once a final determination is concluded.

Canada says it has two favorable rulings from the World Trade Organization and will seek a third if the duties are imposed, as well as appealing under NAFTA. In anticipation of the duties, layoffs have already started in British Columbia and, according to some analysts, could reach 30,000 across Canada. Chretien said he reminded Bush that housing construction has been one bright spot in a weakened U.S. economy and duties on Canadian softwood would only raise prices for consumers and reduce activity.


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