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Vol. 11, No. 24 Week of June 11, 2006
Providing coverage of Alaska and northern Canada's oil and gas industry

Dealing with the Deh Cho

Canada tables offer to end Mac conflict; Prentice positive, Deh Cho hesitant

Gary Park

For Petroleum News

The message from the Canadian government to the Deh Cho First Nations seems to be: Take it or leave it.

The advice from other aboriginal regions in the Northwest Territories to the Deh Cho amounts to: Grab it.

The response from the Deh Cho verges on: Hold it.

And that’s roughly where things stand after Ottawa made its boldest attempt yet to clear a path to unanimous aboriginal support for the C$7.5 billion Mackenzie Gas Project.

Indian and Northern Affairs Minister Jim Prentice, in laying out a bundle of proposals, said he wants to conclude “the largest bit of unfinished business” north of Canada’s 60th parallel.

The package, the first to be tabled since negotiations opened in 2001, includes:

• Cash of C$104 million, plus interest, to be paid out to the 4,500 Deh Cho residents over the next 15 years;

• A resource-sharing component, consistent with other agreements along the Mackenzie Valley, that would include 12.5 percent of the first C$2 million and 2.45 percent of any additional royalties;

• A land and self-government agreement covering 10,000 square miles in the lower Northwest Territories;

• Deh Cho control over surface and subsurface rights, allowing them to set royalty rates and collect 100 percent of the royalties; and

• The right for the Deh Cho to make their own laws.

“Clearly, it’s a claim that we wish to resolve and it has implications in terms of routing of the (Mackenzie pipeline),” Prentice said.

“We hope that the Deh Cho leadership will seriously consider it.”

Offer gives substantial role

Without meeting the Deh Cho demand for shared ownership and jurisdiction over the entire settlement area, the offer is seen by the government as giving the Deh Cho a substantial role in resource development and land conservation.

A June 20 meeting is scheduled for Yellowknife, when federal negotiators will provide further information on the proposals.

The Deh Cho, whose land covers the lower 40 percent of the Mackenzie pipeline right of way, have insisted on a land agreement and taxation rights before any pipeline construction, several times starting and threatening legal action to achieve their objectives.

Prentice rated the offer as “fair.” Deh Cho Grand Chief Herb Norwegian said the proposal is “lowball” and “way out in left field,” while conceding there are elements that could lead to a resumption of talks with the Canadian government.

But Prentice has not withdrawn an April pledge to approve the Mackenzie project even if the government does not have unanimous consent — a stand Norwegian said showed Ottawa was ready to “just bulldoze ahead and hope that major corporations get their way.”

Prentice said May 31 that the recently elected government is eager to resolve the Deh Cho claim because of the implications for the routing of a pipeline.

“It would be nice to have the land claim settled, but this process takes a lot of time,” he cautioned.

“Whether it will be resolved prior to the pipeline is an open question.”

He said the package is consistent with other agreements negotiated with aboriginal communities in Canada’s North over the last 30 years.

In addition, Prentice said the government is holding firm to a promise made by the previous federal administration, to pay C$500 million over 10 years to ease the social and economic impact of a pipeline.

Others see Deh Cho offer as possibly superior

Aboriginal leaders whose regions have concluded settlement pacts view the Deh Cho offer as at least comparable to their own and possibly superior because the door has been opened to a measure of self-government.

The first comprehensive land and resource rights settlement was signed in 1984 and paid out C$152 million over 13 years to the Inuvialuit, who created the Inuvialuit Regional Corp., whose investment decisions in 18 companies have parlayed the initial endowment to about C$300 million. In 1992, the Gwich’in Land Claim generated a payment of C$141 million over 15 years and the next year the Sahtu Dene Metis Land Claim provided C$75 million and a slice of resource royalties.

Last summer, an agreement took effect with the Tlicho (covering the Dogrib Treaty 11 Council land in the west-central Arctic, mostly north of Yellowknife) gaining taxation powers, C$152 million over 15 years and annual payments of about C$3.5 million.

That community of 3,000 is expected to put its money into an income-generating trust. Rather than following the Inuvialuit model of acquiring stakes in existing businesses, the Tlicho are also setting up joint-ventures with firms involved in support services for the BHP Ekati and Diavik diamond mines that have resulted in 300 jobs for residents.

The Aboriginal Pipeline Group, which is holding a 34 percent stake for the Deh Cho in its hoped-for one-third equity position in the Mackenzie pipeline, has its fingers crossed that the Deh Cho will meet a June 30 deadline to exercise that membership option.

The group has estimated that annual dividends from the project could start at C$12.5 million and grow to C$100 million, once the ownership stake has been paid off.

In addition, the aboriginal regions are negotiating land access and benefit agreements with Imperial Oil, the Mackenzie’s lead partner. The shareholder structure for the group provides 34 percent to the Deh Cho, 34 percent to the Sahtu, 20 percent to the Gwich’in and 4 percent to the Inuvialuit (whose land is not crossed by the pipeline, but gained entry because of its role in forming the group), leaving 8 percent for possible outside groups.

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