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Aboriginals stall progress towards Mackenzie Valley pipeline pact Tentative agreement offers one-third equity stake in C$3 billion project, along with training, employment and business opportunities Gary Park PNA Canadian Correspondent
Plans for a natural gas pipeline along the Mackenzie Valley are not dead, only delayed by the failure in early June to achieve a history-making deal giving aboriginal communities one-third ownership of the project, say energy companies and Natives.
Hopes that a memorandum of understanding would be signed by aboriginals and Mackenzie Delta gas owners during a two-day meeting in Hay River, Northwest Territories, were dashed when the Deh Cho First Nations insisted on taking more time to study the proposal.
The tentative document laid out a framework for cooperation between the two sides on a possible C$3 billion pipeline and an equity stake for the Aboriginal Pipeline Group made up of the Inuvialuit, Gwich’in, Sahtu and Deh Cho communities. Deh Cho still have concerns Mike Nadli, Grand Chief of the Deh Cho, said he wanted more time to consult with his people after earlier indicating he would oppose the pipeline until the Deh Cho had negotiated a land claim with the Canadian government, covering the lower 40 percent of the Mackenzie Valley route.
“We’re not against development,” he said. “We have some concerns. We need to bring the deal to our people.”
Other aboriginal leaders said they were hopeful the Deh Cho would make a decision by July 9, possibly earlier.
“We have waited 25 years since we last talked about a pipeline development,” said Larry Torangeau of the Sahtu First Nation. “I don’t think another 25 days is going to hurt.”
Wilf Blonde, who helped draft the document for the APG, said the support from all aboriginal people “is still there, except the Deh Cho, who just want a little bit more time. Of course we want to move on, but a month’s delay is not a disaster.”
A spokesman for Imperial Oil — which heads the Mackenzie Valley Producers Group that includes ExxonMobil Canada, Shell Canada and Gulf Canada Resources — said a delay was not surprising given that 38 Native leaders from seven separate native groups participated in the Hay River meeting.
“It’s very much of a consensus approach,” he said. “That’s part of their process and we respect their process.” Producer group will continue to work with First Nations In the meantime, he said, the producer group would continue to work cooperatively with the First Nations to study various aspects of the pipeline.
K.C. Williams, senior vice president of Imperial, said the producers were “encouraged by the support that was shown for the proposed memorandum and we realize that work still needs to be done. We are breaking new ground and the discussions are complex.
“We are grateful to the aboriginal leaders for their hard work in helping to negotiate principles they believe represent the interests of their people.”
In the Northwest Territories government and among analysts there was the first sign of anxiety at the prospect of a protracted debate among the Deh Cho.
Aboriginal opposition was instrumental in scuttling initial attempts to develop Mackenzie Delta gas in the mid-1970s and NWT Premier Stephen Kakfwi told the Hay River meeting that delays now could allow the Alaska Highway project to proceed first, delaying the Delta for 10 to 15 years.
Gord Currie, an analyst at Canaccord Capital, said the Alaska Highway option creates a sense of urgency. “A delay of a few months might mean losing the race,” he said. Options remain open But analyst John Mawdsley, with FirstEnergy Capital, said there is no immediate urgency because none of the producer groups has made a final decision to proceed.
He said the First Nations “are keeping their options open, which is fair at this time because it’s still pretty early.”
The APG and the producers’ group have spent the last 18 months working on plans for a 1,300 mile pipeline which could have the capacity to deliver 1.5 billion cubic feet per day from a facility near Inuvik to pipelines in northwestern Alberta that feed into the Lower 48.
The producers contemplate initial shipping needs of between 800 million and 1 billion cubic feet per day from established Mackenzie Delta reserves of 5.8 trillion cubic feet. It is estimated that Imperial would control 50 percent of the initial gas, Gulf Canada 25 percent, Shell 17 percent and ExxonMobil Canada 8 percent.
Other producers would have access to the pipeline at commercial rates and terms subject to National Energy Board approval.
The outline does not apply to the proposal by Houston-based Arctic Resources for an “over-the-top” link from the North Slope to the Mackenzie Delta. Aboriginal group would find own shipments Under the agreement, the Mackenzie Valley Aboriginal Pipeline Corp. would have targeted participation and ownership of one-third, equivalent to an initial capacity of 400 million to 500 million cubic feet per day.
The aboriginal group would be considered an equity investor responsible for making its own financing arrangements and, sources say, some discussions have already taken place with federal government officials.
The group would also be expected to secure its own shipments. The Imperial spokesman said that could involve an open season, while some gas could be provided by the existing producers over and above what they required for their committed capacity.
In addition, principles are being developed to cover training, employment and business opportunities for aboriginals, along with land access, selection of a right-of-way and environmental assessments.
Some Native leaders were unhappy with the one-third ownership ceiling, but APG member Doug Cardinal said a 100 percent equity stake — such as that offered by Arctic Resources — made no sense because of the risk and the lack of Native expertise to take full responsibility for the project.
“It’s a very, very dangerous commitment by First Nations,” he said. “We have to learn to walk before we run.”
In a separate announcement, Natural Resources Minister Ralph Goodale said the federal government will implement a “one-project-one-assessment” model for regulatory agencies responsible for conducting an environmental review of the pipeline.
He said the approach had been deployed successfully for other, multi-jurisdictional undertakings, such as the C$3 billion Sable gas project offshore Nova Scotia.
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