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Vol. 10, No. 47 Week of November 20, 2005
Providing coverage of Alaska and northern Canada's oil and gas industry

Gas line fate still unknown

Clock running on Mackenzie partners’ decision; aboriginal breakthrough

Gary Park

Petroleum News Canadian Contributing Writer

Two of its partners are sounding buoyant and even Canada’s energy regulator is moving ahead of a formal ratification, but the ultimate decision-maker, Imperial Oil, is remaining coy about chances of the Mackenzie Gas Project proceeding.

However, Imperial does expect to notify the National Energy Board this month “as to our readiness” to enter hearings next April, company spokesman Pius Rolheiser told Petroleum News.

On the all-important negotiations to reach land access and benefits agreements with aboriginal regions in the Northwest Territories, he said those negotiations “are ongoing … they’re at a point where a couple of days or a couple of weeks could make a real difference.”

Upbeat messages from partners

That was mild reinforcement of upbeat messages earlier in November by two other partners in the Mackenzie consortium.

ExxonMobil President Rex Tillerson told reporters he expects the pipeline “will go forward. I think there’s been good progress made in dealing with a number of long-standing issues regarding aboriginal claims and benefits and compensation that they expect.”

Bob Reid, president of the Aboriginal Pipeline Group, which hopes to take a one-third equity stake in the project, later agreed the discussions are moving in a positive direction.

He told a Yellowknife conference Nov. 9 that talks with the four aboriginal groups have “really heated up over these last 10 days and I’m very optimistic that within the next week or 10 days we will see some access and benefits agreements in place.”

First access and benefits deal reached

That optimism was bolstered Nov. 16 when the Canadian Broadcasting Corporation reported that the first access and benefits deal had been reached, involving three Sahtu communities – Norman Wells, Tulita and Deline.

The national broadcaster said the communities were scheduled to vote Nov. 18 on the package. In addition, it said leaders of the Fort Good Hope and Colville Lake communities were studying an agreement and might put the proposal to an early vote.

The Inuvialuit, Gwich’in and Deh Cho regions – the other three aboriginal communities whose support is needed to allow a pipeline to cross native lands – declined to comment on the status of their talks.

Word of the negotiating breakthrough was accompanied by indications of a rift in the aboriginal ranks.

Stephen Kakfwi, once the Sahtu chief negotiator and a former NWT premier, is now listed as a “technical adviser.”

He told the CBC that Imperial and the Canadian government “have made it clear they’re not happy with my involvement.”

Kakfwi has been one of the strongest advocates of a tax on the pipeline to generate predictable income for the aboriginal residents.

Mackenzie into regulatory review

Northwest Territories Industry Minister Brendan Bell, joining Yukon Energy Minister Archie Lang in presenting a united front on northern pipeline plans, said in Whitehorse he expects the Mackenzie project to leave the starting blocks ahead of an Alaska Highway pipeline.

Although it is the producers’ right to decide which is built first, the Mackenzie is into “regulatory review and the Alaska project doesn’t have a project definition yet,” he said. “If you just look at the levels of the two projects, Mackenzie is further advanced at this point and isn’t as big a challenge as the Alaska project,” Bell said.

But Bell also told the Financial Post that it is vital for “cooler heads to prevail” in the final rounds of Mackenzie negotiations, with all parties realizing that “there is too much to be gained here (in thousands of jobs and billions of investment dollars) to not do the project.”

To ensure that pieces are being moved into place, the National Energy Board has announced the schedule for a Pre-hearing Planning Conference in the Northwest Territories to provide information on the board’s role throughout the lifetime of the pipeline and on the regulator’s hearing process, while gathering views on how to shape aspects of the hearings to meet the needs of participants.

The sessions will be held in Inuvik, Dec. 5; Yellowknife, Dec. 6 and 7; Fort Good Hope, Dec. 12; and Fort Simpson, Dec. 13.

They are designed to avoid delays in making hearing arrangements if Imperial says it is ready to embark on the major regulatory phase, which is expected to last up to 10 months.

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