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Providing coverage of Alaska and northern Canada's oil and gas industry
March 2006

Vol. 11, No. 10 Week of March 05, 2006

Splits among Mac line foes

Aboriginals attack greens, likening interveners to anti-fur crusaders

By Gary Park

For Petroleum News

They brought the first attempt to open up Canada’s northern natural gas resources to a halt in the 1970s and some of them still threaten to derail the current version of a Mackenzie Valley pipeline.

But that is where the similarity ends.

Aboriginal and environmental leaders who are challenging the C$7.5 billion venture not only have little in common, they have been at sharp odds through the early stages of regulatory hearings.

The feelings are so chilly that environmentalists made only a low-key appearance in person and relied more heavily on a joint news release to state their case in the opening round of environmental hearings before a joint review panel.

For the Inuvialuit and Gwich’in of Canada’s Western Arctic there is an underlying view that they do not need outside interference to make their case for protecting a region they have occupied for centuries.

Gerry Roy, a legal adviser for the Inuvialuit, said his clients resent environmental groups trying to tell them “what is in their best interest” when land claims settlements negotiated by the Inuvialuit in 1984 and Gwich’in in 1992 contain large sections on environmental protection and management.

Companies have invested millions

The Imperial Oil-led Mackenzie Delta gas owners’ consortium have already invested millions of dollars and devoted countless hours of effort to build bridges to the aboriginal region, realizing that without those links the whole project is certain to collapse.

Imperial has made solid progress by negotiating four access-and-benefits agreements with aboriginal regions, leaving only the Deh Cho to work out a deal.

Meanwhile, the environmentalists, with the Sierra Club taking the highest public profile, have alienated many aboriginal leaders and Imperial by insisting that Mackenzie gas will be used exclusively to support development of Alberta’s oil sands.

Robert Reid, president of the Aboriginal Pipeline Group — which hopes to take a one-third equity stake in the pipeline — told the Financial Post that it is emphatically not the gas producers’ intent to send all or any of the gas to the oil sands.

“I’ve asked the Sierra Club to show me one contract (with) an oil sands player,” he said.

“The gas moves into Alberta and is then distributed across the North American gas grid — displacing oil in a lot of the eastern seaboard power plants.”

The divisions between the two sides widened during the Inuvik, Northwest Territories, round of hearings when Fred Carmichael, chair of the Aboriginal Pipeline Group, compared the Sierra Club and World Wildlife Fund to those campaigners who impoverished his people through an anti-fur movement 40 years ago.

“Some similar organizations that killed our trapping economy in the past are once again trying to destroy this opportunity to gain back our independence, our self-sufficiency and our pride,” he said.

In testifying before the joint review panel, Carmichael said the trapping economy was ruined by people or organizations “who either did not understand, or care, that this was our livelihood.”

The negotiation of land claims and the establishment of a local regulatory board have helped point the way ahead again, he said.

Not that companies exploring for oil and gas, gold and diamonds have won favor with aboriginals, Carmichael noted, pointing to the 1960s and 1970s when those industries showed “little or no respect for our lands. …. (But) today there’s an understanding and respect between industry and aboriginal peoples.”

Sierra Club: no role in anti-fur movement

Sierra Club conservation director Stephen Hazell defends his organization, saying it had no role in the anti-fur movement and claiming it was working successfully with some aboriginal groups in Canada’s North.

“It’s a myth that there’s a split between the environmental and aboriginal communities,” he said, while conceding the Sierra Club opposes a gas pipeline because the fossil fuel economy is just as doomed as the trapping economy.

“We think the pipeline will create far more problems down the road,” Hazell said.

He said Canada’s North has a long history of “large projects leaving large messes,” such as the poisonous arsenic trioxide left by the now-closed Giant gold mine in Yellowknife — problems that Canadian taxpayers are now paying to clean up.

Hazell challenged Imperial to post performance bonds to ensure any cleanup costs are covered — a proposal that was rejected by Randy Ottenbreit of Imperial, who said Imperial’s wealth and 125-year history are proof that it will take whatever precautions are needed.

But a warning message was delivered to the joint review panel by Gordon Morians, the lead author of a 300-page study of Alaska’s dealings with the oil industry and the negative impact on wildlife stocks in the state.

He said a Mackenzie pipeline could open the door to a wave of hydrocarbon development that will require a proliferation of roads, seismic lines, well sites and pipelines.

“Such expansion will differ in detail in the Northwest Territories, but a pattern bearing these characteristics is inevitable,” Morians said, adding it was “nonsense” to ignore the inevitability of follow-up developments, despite Imperial’s reluctance to talk about projects that might spin off from the three anchor gas fields on the Mackenzie Delta.

Deh Cho and Dene Tha

Carmichael’s reference to the new spirit of cooperation between industry and aboriginals is still a journey in progress, especially for the Deh Cho and the Dene Tha, who have unresolved issues they want dealt with before they will give wholehearted support to the Mackenzie project.

The Deh Cho’s concerns are well documented, but the Dene Tha — representing 2,500 residents spread over northwestern Alberta, northeastern British Columbia and the southern end of the Northwest Territories — are seizing attention as they press ahead with legal efforts to halt the environmental review.

Claiming it has been left out of both the hearings and the benefits negotiations, the group has taken its fight to the Federal Court of Canada, seeking a ruling that Alberta sections of the pipeline should be included in the review and not left for Alberta regulators to handle.

Dene Tha lawyer Bob Freedman said his clients have “no more status (with the panel) than the local Skidoo club.”

He said the Canadian government knew the pipeline was going to cross Dene Tha lands and made no effort to contact the community, despite an 1899 treaty requiring consultation on any changes to land use.

Freedman said it is not clear whether recommendations made by the national panel can be enforced in Alberta.

But, typical of the divisions within aboriginal communities, the Dene are split into two camps, those who fear the environmental and social disruptions of a pipeline and those who see resource development as their way out of poverty and an end to dependence on government handouts.

Federal lawyers insisted the case should be tossed out of court by Justice Michael Phelan, who has given no indication when a ruling might be made.





New ministers stay the course

Gary Park

The new Canadian government shows no signs of veering off the path pursued by the defeated Liberal administration in supporting the Mackenzie Gas Project and dealing with the prickly issue of who should build the Canadian section of an Alaska gas line.

As they have started to reach out from Ottawa to the wider community, Indian and Northern Affairs Minister Jim Prentice and Energy Minister Gary Lunn have even endorsed measures put in place by their predecessors.

Prentice, while keeping his cards close to his vest, has given no indication of wanting to scuttle plans for a C$500 million socio-economic fund to help small Native communities deal with the influx of pipeline construction workers and the exploration that the project is expected to generate along the Mackenzie Valley, although the “details still need to be worked out.”

However, he agreed the fund is “tied to the pipeline and the approval of the pipeline.”

Rating the project as “extraordinarily important,” Prentice said the Conservative government of Prime Minister Stephen Harper will also continue negotiations with Imperial Oil on the fiscal terms for a pipeline and a possible government equity position in the project.

But Prentice would not go beyond saying that the discussions are ongoing and the issues are before cabinet.

He is also pledged to open talks with the Deh Cho First Nations, whose lands cover 40 percent of the pipeline route, and in return he expects the Deh Cho to make some “very significant” moves by the summer.

One glimmer of hope has been offered by Deh Cho Grand Chief Herb Norwegian, who has a positive impression of the new minister based on Prentice’s work on aboriginal issues during his time in the federal opposition party and during 10 years as a law commissioner of the Indian Claims Commission of Canada.

Prentice is also echoing the stand taken by the Liberal government that the Mackenzie project will get priority attention in Canada, given the number of critical decisions that are needed in the short-term to ensure Mackenzie Delta gas reaches market no later than 2011.

For that reason and the fact that completion of an Alaska pipeline is unlikely before 2016, Prentice wants to wait until the Alaska government and the North Slope gas owners resolve the issues before them and decide how they want to proceed.

On the larger scale, Prentice has shown he will not be party to any unnecessary delays in either project.

Lunn had his first meeting in Alberta when he met with Alberta government and industry officials.

“Alberta’s leadership in (petroleum, mining and forestry) areas cannot be overstated … and we have a lot to learn from them,” he said, in promising to work more cooperatively with all provinces.

Without getting into details, Lunn said the government would like to streamline regulations between the federal and provincial governments to ease the burden on industry.

He also promised a different approach in tackling issues such as cutting greenhouse gas emissions, finding an alternative to the discord that marked previous federal-provincial dealings.

Pierre Alvarez, president of the Canadian Association of Petroleum Producers, welcomed signs of a new mood.

He said Lunn, unlike those politicians who see the resource sector as a “sunset” industry, is one who “sees tremendous opportunities across the country and wants to see those taken advantage of.”


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