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Resources minister rules out federal
guarantees for Mackenzie pipeline
Gary Park PNA Canadian Correspondent
Aboriginal leaders in the Northwest Territories may have both won and lost the issue of subsidies for proposed Arctic natural gas pipelines — but they are far from ready to call it quits.
In pressuring the Canadian government to oppose a guaranteed floor price for Alaska gas they appear to have undermined their own case for a C$70 million loan guarantee to secure their place in the planning of a Mackenzie Valley pipeline.
Canada’s Natural Resources Minister Herb Dhaliwal, in a conference call Nov. 11, said the government has never provided loans or loan guarantees for energy pipelines and did not have any intention of changing its policy for a pipeline from the Mackenzie Delta to Alberta.
His hard-line stance appeared to scuttle efforts by the Aboriginal Pipeline Group to obtain C$70 million to enable Northwest Territories Natives to participate in design work for a pipeline along with the Mackenzie Delta Producers Group.
Guarantee could be viewed as subsidy Federal officials have told PNA that the government is concerned that a loan guarantee could be interpreted as a subsidy along the same lines as the U.S. Senate plan for a price guarantee for North Slope gas to aid construction of a $15-$20 billion pipeline — a proposal the Canadian government categorized as an unfair subsidy that would distort the North American gas market.
A loan guarantee has been viewed by the Aboriginal Pipeline Group as essential to aboriginal hopes of securing one-third ownership of the pipeline, without which leaders including Northwest Territories Premier Stephen Kakfwi have threatened to either delay or halt development of the project.
“Twenty-five years ago, the failure of stakeholders to take seriously the aspirations and need for support from the aboriginal people ensured that the (pipeline) project did not proceed,” Kakfwi told oil industry executives in Calgary in late September.
“Unless NWT aboriginal groups, communities, businesses and residents can realize real benefits, there is no reason for (northern) resource activity to proceed,” he said.
Infrastructure funding requested Earlier this year’s, the Northwest Territories government told the federal government that it needed C$133 million over four years to establish an infrastructure that would facilitation construction of a Mackenzie Valley pipeline.
It is not yet clear whether Dhaliwal, who made his comments from India where he is part of a trade mission, was delivering the Canadian government’s final verdict on federal support for a pipeline.
But he did leave a shred of hope by suggesting that financing options other than loans or loan guarantees could be explored in a fresh round of meetings between newly-appointed federal negotiator Roland Priddle and the Aboriginal Pipeline Group under the chairmanship of Fred Carmichael.
Dhaliwal said he still expects the Aboriginal Pipeline Group will play an “important role” in any Arctic pipeline.
Carmichael told a news conference Nov. 12 that the initial discussions with Priddle have been “very fruitful and productive,” arguing that the Mackenzie Valley project is “one of those instances” that could justify government loan guarantees.
He said there is every chance the current discussions with Priddle will “reach a positive resolution for all parties.” Producers’ group supports loan guarantee Imperial Oil Ltd., the lead partner in the producers’ group, declined to comment on Dhaliwal’s remarks beyond saying it supports Aboriginal Pipeline Group efforts to obtain a loan guarantee and is confident the funding issue can be resolved in a way that allows the project to move forward.
Executives of other northern operators said there are alternatives to guaranteed commodity prices for Arctic gas that would fall outside the realm of pure subsidies, including modifications to royalty structures and investment tax credits that have been employed to accelerate oil sands development in Alberta.
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