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Northwest Territories aboriginals divided over pipeline options Aboriginal Pipeline Group says financing deal is close for Mackenzie Valley standalone project; other First Nations leaders take second look at 2001 pact Gary Park PNA Canadian Correspondent
Aboriginal regions in the Northwest Territories are being pulled in two directions as the pace of Mackenzie Valley pipeline negotiations quickens.
In the process there are signs of hardening positions within two camps — one that supports the memorandum of understanding with the Mackenzie Delta Producers Group that carries the hopes of a one-third aboriginal stake in a pipeline and the other, a loosely knit collection of splinter groups that favors taking a second look at the MOU.
Vying for attention are the two primary proposals to ship Delta gas to southern markets: The standalone Mackenzie Valley system proposed by the producers’ group and the Northern Route project by Arctic Resources Co. and its Canadian affiliate ArctiGas Resources Co. to combine North Slope and Delta gas into one delivery system.
Tension levels among the First Nations communities have been rising since the ground-breaking deal in October 2001 when five of six regions in the Northwest Territories operating under the Mackenzie Valley Aboriginal Pipeline Corp. negotiated a non-binding memorandum of understanding with the Mackenzie Delta Producers Group, consisting of Imperial Oil Ltd., ConocoPhillips Canada Ltd., Shell Canada Ltd. and ExxonMobil Canada.
That opened the door to a one-third aboriginal equity stake in a C$3 billion Mackenzie Valley pipeline, but left the APG to seek from 400 million to 500 million cubic feet per day of supplies from E&P companies outside the main producers’ group.
Prodded by the Northwest Territories government and federal authorities and under pressure from their own communities, 21 of 29 Dene chiefs agreed last month to reevaluate pipeline options and aboriginal participation in the project. Breakaway groups are also surfacing in the Sahtu and Gwich’in regions.
Group scrambling to raise funds To compound the challenges, the APG — having been turned down by the Canadian government — has been scrambling to raise a C$70 million loan guarantee to secure its place in the “project definition” phase now under way.
Fred Carmichael, newly appointed chair of the APG, told Northwest Territories reporters earlier this month he is “90 percent sure or better” that the funding will be secured through private sources following on-going meetings in Calgary with undisclosed parties.
In predicting a “good news” announcement this month, he has also expressed confidence that the APG can ultimately raise its C$300 million equity share if the project goes ahead.
Sources familiar with the negotiations told Petroleum News Alaska that an agreement covering all or part of the C$70 million needed to keep the APG alive is within sight.
But progress on that front shows signs of being undermined by crumbling aboriginal unity, notably among the Dene chiefs, who have appointed a committee to evaluate the costs and benefits of the Mackenzie Valley and Northern Route proposals. A report is expected by mid-February.
Fueling doubts over the MOU, Northwest Territories Resources Minister Jim Antoine told the Calgary Herald before Christmas that there are concerns in the federal cabinet and among northern leaders that the MOU is less than a fair deal.
Echoing Charlie Furlong, Aklavik Indian chief in the Mackenzie Delta., Antoine said there is a “general concern” that the APG is carrying a disproportionate share of the risks while being expected to find incremental gas from E&P companies that have yet to establish significant reserves.
Even so, he has said a unified position is achievable if there is a willingness to discuss various options, including such issues as shared gas royalties and a land access fee rather than outright ownership.
Some aboriginal leaders have also complained that the APG and producers’ group have failed to communicate with them, heightening feelings that the value of aboriginal participation has not been properly recognized.
But the producers’ group has insisted it is moving ahead on the basis of an MOU reached with three-quarters of the Northwest Territories aboriginal population.
Much could hinge on findings For all sides, much could hinge on the findings of Roland Priddle, former chairman of the National Energy Board who is the federal government’s appointed negotiator on the pipeline.
He was originally scheduled to deliver a report to Natural Resources Minister Herb Dhaliwal and Northern Affairs Minister Robert Nault before Christmas.
However, meetings with federal, Northwest Territories and aboriginal leaders have taken longer than expected. A spokesman for Nault said the desire to “get it right this time” is as important as the urgency to complete the report.
In the meantime, the erosion of support for the APG is building, in the process reviving interest in the Northern Route scheme.
Not enough Mackenzie gas Harvie Andre, chairman of ArctiGas Resources Co., told PNA he believes the APG has “lost credibility” in the Mackenzie Valley as more aboriginal leaders come to the conclusion that there is not enough proven Delta gas to support a standalone pipeline.
“The only thing that makes any sense” is to complete the engineering for a Valley pipeline then add another 300 miles of pipeline under the Beaufort Sea linking Alaska’s North Slope and the Mackenzie Delta, he said.
Andre said a study by Calgary consultants Wright Mansell Research for the Northwest Territories government and TransCanada PipeLines Ltd. suggested that an economically viable Mackenzie Valley pipeline should be backed by reserves of 14.5 trillion cubic feet — a far cry from the Delta’s current recoverable reserves of 5.8 trillion cubic feet or the total discovered marketable reserves in the Delta/Beaufort Sea region of 9 trillion cubic feet, although the region is thought to hold as much as 64 trillion cubic feet.
He suggested that given all of the conflicts among producers, E&P companies, pipelines, aboriginals and the National Energy Board the answer could lie in “bringing all of the stakeholders together … with all being able to protect their interests.”
Arguing that Canada does not need another pipeline company, Andre said that a Mackenzie Valley delivery system should be managed by the existing Canadian-based pipelines — TCPL, Enbridge Inc. and Alliance Pipeline Ltd. Interest has also been expressed by U.S.-based Duke Energy Corp.
Once Arctic gas reaches Edmonton “there needs to be the means to take it elsewhere and that needs to be coordinated very carefully,” he said.
ArctiGas wooing aboriginal communities A preliminary Northern Route application was submitted to the National Energy Board a year ago and since then ArctiGas has been trying to woo more aboriginal communities into its fold, despite tough opposition from Alaska, the NWT government and the Delta producers.
The Inuvik Gwich’in Band has signed on with ArctiGas and its chief James Firth is president of the Northern Route Gas Pipeline Corp., an aboriginal-owned company that has entered into a long-term program management agreement with ArctiGas.
ArctiGas gained further momentum in mid-December when a land corporation in the Sahtu threw its support behind the venture.
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