Mackenzie gas line group seeks compensation

A potential aboriginal stakeholder in Canada’s Mackenzie Valley natural gas pipeline is about to lean on the Canadian government for both cash compensation to cover its costs in a prolonged regulatory process and a loan guarantee for its share of infrastructure work.

The Aboriginal Pipeline Group, which has an option to take a 33.33 percent ownership position in a pipeline, if one proceeds, said it will request C$500 million from Ottawa once talks on a fiscal agreement for the Mackenzie Gas Project resume in the third quarter.

Orlando Hansen, the APG’s manager of regulatory and technical services, told a North American pipeline symposium in Calgary his group will ask Northern Development Minister John Duncan for loan-backing to facilitate bank negotiations.

He said the compensation will be “only a small part of the total guarantee we expect Ottawa to provide.”

Hansen said the pitch will be based on viewing the Mackenzie project as a “nation-building facility,” in the same way that Ottawa provided financial backing for the Hibernia oilfield offshore Newfoundland and the construction of TransCanada’s east-west natural gas pipeline in the 1950s.

When the National Energy Board approved the MGP in March the federal government ruled out subsidizing construction, but did not make clear whether that included loan guarantees.

The APG’s role in any Mackenzie pipeline depends on its ability to secure enough gas from producers outside the core owners’ group of Imperial Oil, Shell Canada, ConocoPhillips Canada and ExxonMobil Canada.

Hansen said the APG is increasingly confident that the Dehcho First Nations, the major aboriginal holdout, will join other First Nations in the APG “fold” later this year.

—Gary Park