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Canada, NWT again warn of fall-out from gas pipeline subsidies Northwest Territories’ Antoine insists proposal before Congress is not what Canada agreed to 25 years ago, making Canada-U.S. treaties, statutes and agreements void Gary Park PNA Canadian Correspondent
The Canadian and Northwest Territories governments are continuing their unrelenting drive to oppose subsidies for an Alaska Highway gas pipeline as a Congressional committee draws closer to a pivotal decision.
Northwest Territories Economic Development Minister Jim Antoine has gone as far as arguing that 25-year Canada-U.S. treaties, agreements and states in support of Alaska gas development are no longer valid.
Those cross-border deals include the Transit Treaty, the U.S.-Canada Agreement on Principles and the 1977 Northern Pipeline Act.
In a letter to Canada’s Natural Resources Minister Herb Dhaliwal, Antoine said that in the intervening 25 years the concept has “substantially changed, the natural gas market has been transformed and the understandings regarding the role of private financing versus public guarantees are about to be turned on their head.”
He argued the project contemplated for employing U.S. tax breaks and loan guarantees to achieve a highway delivery system is “not what Canada agreed to and not what Canada must be forced to accept.”
Joining the lobbying effort, Canada’s ambassador to the United States, Michael Kergin, said government financial backing for the highway route could depress North American gas prices, undercut conventional gas production and slow development of future projects.
Gas production would increase In a letter earlier this month to the U.S. undersecretary of state for economic and business affairs, Kergin said “increasingly higher levels of Alaskan gas production encouraged by the (Senate’s proposed guaranteed floor price) will tend to depress prices in the region, in Alberta and elsewhere in North America.”
Dhaliwal said Sept. 18 that during his recent visit to Washington, D.C., he received a presentation from BP Plc on a Congressional committee’s proposal for a production tax credit that would kick in when Alaska gas prices dropped below US83 cents per thousands cubic feet.
The Canadian minister said he was not impressed with the alternative. “Fundamentally, we are against subsidies. A subsidy is a subsidy,” he said.
Even Exxon Mobil Corp., the largest owner of Alaska gas reserves, viewed the latest effort to find a solution with skepticism.
“If the project were to go forward, it really should be able to stands on its own merits and not have the subsidy and the supports that really this entails,” spokesman Bob Davis told the National Post, a Canadian daily newspaper. “We believe subsidies create an artificial price environment and we disagree with the assessment of them.”
The congressional committee is expected to reach a conclusion next month on an incentives package for an Alaska pipeline.
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