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Vol. 10, No. 23 Week of June 05, 2005
Providing coverage of Alaska and northern Canada's oil and gas industry

Mackenzie gas pipeline plans in real danger

Former Alberta energy minister sets 60-day deadline; says LNG could supplant Arctic gas

By Gary Park

Petroleum News Canadian Correspondent

Unless the Canadian government and northern aboriginals can resolve their differences within 60 days, the Mackenzie Gas Project is in “real danger of not being built,” said Murray Smith, former Alberta energy minister and now head of the province’s office in Washington, D.C.

He told the Calgary Chamber of Commerce May 30 that “government inaction and intransigent negotiating positions” have put the C$7 billion scheme at risk.

“Competitive market forces will wait for no one and the demands for natural gas in a timely fashion and stable markets in Canada and the U.S. are no exception,” Smith said.

The challenge posed by imported liquefied natural gas in both Eastern Canada and the United States could displace gas from Canada’s Arctic if there is not quick action to resolve land access and benefits agreements with aboriginal communities in the Northwest Territories, he warned.

“There have to be some negotiations, there has to be some resolutions made for that pipeline to go ahead,” Smith said. “It’s important to Alberta and it’s important to Canada and it’s important to the North.”

To that end, permitting and land access must be put on a fast track, with the Canadian government, Deh Cho First Nations and Mackenzie lead partner Imperial Oil putting an “extremely sharp focus” on the land deals over the next 60 days.

Early start of Alaska natural gas pipeline worries some

David MacInnis, president of the Canadian Energy Pipeline Association, agrees with Smith’s call for urgency, suggesting that the Canadian government has been too slow in trying to end the impasse.

But MacInnis said he is more worried about the prospect of an early start on an Alaska gas pipeline, which observers say would put such pressure on construction labor, materials and the North American market that the Mackenzie project would likely be shelved.

Greg Stringham, a vice-president of fiscal policy and markets at the Canadian Association of Petroleum Producers, took a different view, suggesting it could be another two years before the Alaska proposal could derail the Mackenzie line.

Meanwhile, confusion over the status of the Deh Cho negotiations and lawsuits seems to grow, not diminish.

News media reports in late May said the Deh Cho chiefs had given conditional approval to an agreement with the federal government.

The pact was said to include a C$15 million federal payment into a Deh Cho trust account, with the money earmarked for economic development.

A second resolution was reported to lay the groundwork for Deh Cho participation in the environmental and regulatory review processes.

Norwegian says no deal yet

But Deh Cho Grand Chief Herb Norwegian quickly dampened hopes of a deal, saying any talk of conditional approval was misleading, although he did indicate that the elements of an agreement are coming together.

“Nothing is final,” he said, emphasizing that the Deh Cho communities will not give up their right to sue the federal government in the future.

He said details of any agreement will not be made public until a pact is signed, but declined to predict when that might happen.

“We have to make sure there is some content to it and that people are actually going to feel good about it,” Norwegian told the Canadian Broadcasting Corporation. “We are not talking about selling out our people at this point.”



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