January 22, 2007 --- Vol. 13, No. 6January 2007

NWT, Mackenzie partners sign jobs, benefits pact

The Northwest Territories government and the Mackenzie Gas Project proponents have signed a major socio-economic agreement that NWT Industry Minister Brendan Bell views as the key to a long-term oil and gas industry in Canada’s North.

Success of the pact, covering 67 pages of topics such as job training, employment and business opportunities, hinges on a C$21 million job training program that Bell hopes can provide the skills for northerners to participate in future resource exploration and development.

He is resolved to seeing the MGP become a springboard to opening up the oil and gas wealth of the NWT and the Beaufort Sea — a prospect he described as a “100-year industry.”

Based on current regulatory filings, the agreement would provide an annual average 790 pipeline construction jobs (or 16 percent of the total) over four years (although Imperial Oil has said it is weighing the possibility of building a pipeline in two years as it wrestles with project cots) and 138 jobs to operate the project.

Bell told Petroleum News he believes the objectives are “realistic,” but conceded “we are going to be challenged to meet the employment targets” in a region with only 43,000 residents.

To that end, he said the signing occurred now, possibly 18 months ahead of any final decision to proceed with the MGP, “to do as much as we can” to advance job skills and employment programs.

The terms of the agreement commit the operators to “use reasonable commercial efforts” to buy at least 15 percent of construction materials, supplies, equipment and services from NWT companies, which must be owned at least 51 percent by NWT residents to qualify.

Paying for the job training would be split between the NWT government and the MGP proponents to a total C$1 million a year for 10 years from the start of construction and C$500,000 a year through the operating life.

Imperial Oil spokesman Pius Rolheiser told Petroleum News the project’s operating life will remain “indefinite” until a go-ahead decision is made and lays out the size and scope of the project.

He said the socio-economic deal is “a significant step forward,” but more important milestones lie ahead, covering regulatory approvals, final costs and construction schedules, commercial agreements with gas customers and a framework covering taxes and royalties.

Rolheiser said the agreement is intended to ensure that “all the people of the NWT benefit in a meaningful and long-term way.”

He said benefits and land access agreements reached with aboriginal communities, or currently being negotiated, are “complimentary.”

Bell said the agreement is in addition to a federal commitment to spend C$500 million handling the socio-economic impacts of the MGP and the cash component of various aboriginal land claims settlements.

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