Mackenzie pipeline must come with aboriginal benefits

Northwest Territories Premier Stephen Kakfwi sees progress across a wide front, but insists on federal help to provide infrastructure and services, along with revenue-sharing deal

Gary Park

PNA Canadian Correspondent

Northwest Territories Premier Stephen Kakfwi is emphatic that the Mackenzie Valley gas pipeline “is going to be built.”

But he is just as adamant that it will be “done right,” which means the benefits of Arctic gas development must allow aboriginal governments in the Northwest Territories to share jurisdiction and resource wealth to achieve community economic progress.

“Every person (in the Northwest Territories) must benefit from this great project and be a partner in it,” he told an Arctic gas symposium in Calgary on March 4.

In delivering an updated report card on Arctic gas and pipeline development, Kakfwi said there has been “real progress” on a number of fronts, including:

• An imminent official announcement on business arrangements between the Mackenzie Delta Producers Group and the Aboriginal Pipeline Group, to give Native communities along the Mackenzie Valley a stake in the ownership and control of the pipeline.

• Funding from the Canadian government for a pipeline officer in Yellowknife, Northwest Territories, to serve federal, Northwest Territories and aboriginal regulatory boards, along with continued pressure in Washington to discourage the Bush administration and lawmakers from offering “market distorting subsidies” for an Alaska Highway pipeline.

• Industry confidence in Canada’s North to make the current drilling season “one of the best in recent years,” with companies such as Petro-Canada, Devon Canada Corp., Chevron Canada Resources, Apache Canada Ltd., Anadarko Canada Corp., Paramount Resources Ltd., Canadian Natural Resources td. and Devlan Exploration Inc. active between the Beaufort Sea and the 60th parallel.

• A protocol between the Northwest Territories and Yukon governments that agrees the gas resources of the Yukon’s Eagle Plains and Peel Plateau basins are best served by a lateral connection to the Mackenzie Valley pipeline.

Governments will work together

While the final decisions rest with the Mackenzie Delta Producers Group and the Aboriginal Pipeline Group on the nature and timing of northern gas development, Kakfwi said he expects a project information package will be filed soon with Canada’s National Energy Board, to formally launch the regulatory process.

Hart Searle, a spokesman for Imperial Oil Ltd., the lead partner in the producers group, told Petroleum News Alaska that the group’s intention is to file regulatory applications by late 2003, setting in motion a process to have gas flowing to market in 2008 at the earliest.

Kakfwi said market potential for Northwest Territories gas remains strong, in the face of declining production in Western Canada and the Lower 48 and rising demand.

The trends have “strengthened our expectation that the price of natural gas will remain strong over the next decade and beyond,” he said.

“It should provide the comfort to the Mackenzie Valley producer group to make the commitment to proceed with the investment in the pipeline project,” he said.

The costs are estimated at C$3 billion to C$4 billion for a pipeline, with another C$1 billion to develop the three Mackenzie Delta fields and build the gas-gathering system.

But the gap between “simply making progress and getting it right” comes down to three fundamental conditions, Kakfwi said: benefits must accrue to northern residents; development must be environmentally and economically sustainable; and market forces must determine the location and timing of gas field and pipeline development.

In particular, he urged the industry to work with the Northwest Territories to convince the Canadian government that as much as the industry wants certainty to commit to a pipeline, the Northwest Territories’ communities “need certainty that they will have roads, schools, training, health-care and jobs when a pipeline starts, not after.”

Government going broke

The end result is that the Northwest Territories is projecting a budget deficit of C$100 million next fiscal year as it invests in ensuring that northerners, especially aboriginals, will be trained for highly skilled industry jobs.

The Northwest Territories is also spending heavily on transportation infrastructure to support resource development and is under pressure from its residents to maintain or increase safety-net funding for health, education and housing.

As part of current negotiations, the Canadian government must understand that Northwest Territories residents want to see an “immediate return” from a thriving diamond industry as pat of a devolution of jurisdiction and revenues.

“Unless they see a larger and more immediate return, I am concerned that support for resource development amongst residents of the NWT will decline significantly,” Kakfwi warned.

Not all of Kakfwi’s optimism is shared by aboriginal leaders in the Northwest Territories.

Call for modifying MOU

“We are certainly looking at modifying the memorandum so that it provides a better deal for aboriginal people,” he said.

Furlong made the point in December that there is growing concern among some aboriginal groups that the agreement does not adequately address the value of aboriginal support and commitment to the pipeline.

Mike Nadli, grand chief of the Deh Cho First Nations in the lower Northwest Territories, the only aboriginal group not to sign the memorandum, told the Arctic gas symposium that the Deh Cho are concerned that approving the pipeline could compromise recent progress to negotiate land resource management.

He said both the Mackenzie Valley project and the proposed northern route option by ArctiGas Resources Corp. “bring into question our jurisdiction and sovereignty over our lands and resources, especially as we negotiate those very subjects.”

Nadli said the Deh Cho’s “last resort would be court action. At this point, we’re not eliminating that.”

Even Aboriginal Pipeline Group Chairman Fred Carmichael told the symposium there is unease within aboriginal communities based on past failures to secure jobs and other services to support resource projects, while the federal government has yet to agree on a system of sharing more of the revenues.