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Vol. 10, No. 20 Week of May 15, 2005
Providing coverage of Alaska and northern Canada's oil and gas industry

Getting back on track

Canadian government bows to aboriginal and industry pressure and proposes special fund to meet NWT social needs and restart Mackenzie line negotiations

Gary Park

Petroleum News Canadian Correspondent

The Canadian government has bowed to industry and aboriginal pressure by taking the first steps towards breaking the logjam that has stalled progress on the Mackenzie Gas Project.

It will contribute to a temporary fund to help solve socio-economic needs in communities along the Mackenzie pipeline right of way in the Northwest Territories, covering housing, drug and alcohol abuse, health and dental care, roads and schools.

Deputy Prime Minister Anne McLellan said May 10 that she hoped the offer will “relieve” some of the pressure that saw fieldwork on the gas project halted two weeks ago, heightening fears that the C$7 billion venture could be scrapped.

“Without a doubt, both governments (Canada and the Northwest Territories) are very strongly committed to the Mackenzie Valley pipeline project,” she said.

Northwest Territories Premier Joe Handley said the federal proposal “provides us with the means … to deal with the socio-economic impacts of the pipeline.

“Now the challenge is for us and for aboriginal governments to figure out what it is to cost.”

McLellan provided no details on how much money will be available or how it will be spent.

But she gave an assurance that the arrangement does not place any responsibilities on the Mackenzie consortium to fund aboriginal programs, agreeing with the Mackenzie partners that too many social issues were being injected into negotiations about land access and benefits.

The next crucial step is a May 13 meeting in Calgary between Handley and aboriginal leaders to put some numbers on what the program will cost.

Northwest Territories Resources Minister Brendan Bell said both sides will then be able to submit a formal request to the Canadian government.

He said progress must be made on that front if full-scale public hearings are to start in September.

Deh Cho negotiations scheduled

Negotiators from the Canadian government and the Deh Cho First Nations also scheduled a May 13 meeting to seek a resolution of a Deh Cho lawsuit blocking progress on the Mackenzie regulatory front.

Kenya Norwegian, who heads a coalition of five Deh Cho communities, said a new federal offer is expected to reach an out of court settlement.

The four aboriginal groups affected by the pipeline — Deh Cho, Sahtu, Gwich’in and Inuvialuit — have shown no sign of letting up in their demand for C$40 million in annual payments from the consortium.

Grand Chief Herb Norwegian had earlier declared the Deh Cho would not shift from their hard-line stance to extract money from the pipeline to alleviate a multitude of social problems — demands that Imperial Senior Vice President Michael Yeager said could run to “hundreds of millions” of dollars.

Imperial and its partners have refused to be drawn into any negotiations involving the payment of pipeline property taxes or surcharges to the aboriginal communities.

“One of the points we have made to the federal government is that there are many pressing social needs in the territories,” said Hal Kvisle, chief executive officer of TransCanada, the leading contender to build the gas line.

“Local communities have asked the pipeline project to provide all this. We don’t think that is right. We think those are matters between the federal government and the people who live there.”

The Globe and Mail reported on May 9 that Imperial Oil was close to presenting a revised offer to the four aboriginal groups, but provided no further details.

Kakfwi demands revenue

Stephen Kakfwi, a former Northwest Territories premier and now chief negotiator for the Sahtu, has been adamant that a C$7 billion pipeline will not be allowed to cross aboriginal land and “face the prospect we will be as poor as we are today.”

He said access to pipeline tax revenues would meet with unanimous approval from the aboriginal leaders.

Kakfwi said aboriginal communities are properly constituted governments who need revenue, not federal hand-outs, for their survival.

“We are landowners and as landowners we also expect revenue,” he said.

The first step in that direction needs a decision by the Canadian government to devolve powers to the Northwest Territories government — a goal Prime Minister Paul Martin has promised to put in place by 2006.

McLellan and Handley said they had made progress on that front as well on May 10, reporting that a draft revenue-sharing agreement is imminent that would allow the Northwest Territories to keep more of the money from development of its resources.

Currently the Northwest Territories keeps only 4 percent; Handley wants that figure to grow ten-fold.

“No jurisdiction would agree to the extraction of its non-renewable resources for 4 cents on the dollar,” Handley said.

“It’s very expensive to do business in the north. We’ve got a very primitive infrastructure.”

McLellan committed to an agreement-in-principle by next month, without disclosing how much the Northwest Territories could expect.

She also said there would be a delay between an agreement-in-principle and a final pact, which Handley hopes will be reached some time in 2006.

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