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NEWS BULLETIN

February 11, 2003 --- Vol. 9, No. 15February 2003

Mackenzie Valley deal “days, or weeks” away

A breakthrough to open the way for Mackenzie Delta gas development is close, said Canada’s Indian and Northern Affairs Minister Robert Nault, but the key players are keeping tight-lipped about the nature of any deal.

Speaking to reporters Feb. 10, Nault said “there is no doubt that we’re within a matter of days, if not weeks, before there is an announcement to move forward.”

The Canadian government will “play a very large role in that in the regulatory side,” he said.

Nault emphasized that his government is “very keen to see a northern pipeline go forward. We’ve positioned ourselves to be able to regulate major oil and gas developments in the north. So I think that’s a very positive announcement for everyone.”

But reports circulating that a deal is imminent between the Aboriginal Pipeline Group and TransCanada PipeLines Ltd. are a “little out of whack,” he said.

In recent weeks, speculation has been building that TransCanada is ready to cover the C$70 million needed by the APG to cover its share of costs for preliminary design and regulatory work on the proposed stand-alone Mackenzie Valley pipeline.

TransCanada and the APG said the negotiations remain confidential and dismissed as rumor a Feb. 10 report in the Edmonton Journal, which cited unnamed sources as saying Nault was about to announce that TransCanada would put up the money to secure a one-third aboriginal equity position in the pipeline.

Nault said “it’s pretty much speculation” that he planned to be in Western Canada this week to make a specific announcement on a deal.

Industry sources have told Petroleum News Alaska that TransCanada has been going to great lengths to lock up the dominant role in delivering Arctic gas to southern markets, although Calgary-based Enbridge has sent out strong signals that it, too, wants to gain a share of the business.

Brian Prokop, an analyst with Peters & Co., told the Canadian Press news agency last month that a pipeline could be 70 percent debt-financed because of the predictable rate of return, meaning the APG would need only C$300 million in cash to support its one-third ownership stake.

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