GAS PIPELINE SHUTDOWN ‘ A REAL OPTION’

MACKENZIE VALLEYWARNING Aboriginal firm and negotiator say window is closing

Calgary Bureau Chief CALGARY •

Two key players in the $7-billion Mackenzie natural gas pipeline project warned yesterday that time is running out to save the massive venture.

Bob Reid, president of the Aboriginal Pipeline Group, said the project’s partners have set a six-to-eight-week window to settle key agreements with aboriginals and the federal government, after which shutting down the project is “a real option.”

Meanwhile, Stephen Kakfwi, the former premier of the Northwest Territories and now a negotiator for one of the aboriginal communities, said the two sides are so far apart the November deadline is unrealistic.

“It’s been too long and no deal has been made — not with the federal government, with the government of the Northwest Territories, or a single aboriginal group,” he said.

Mr. Reid said further delay would push back its 2011 completion date and set it on a “ collision course” with the competing, US$20-billion Alaska natural gas pipeline. It’s unlikely the two Arctic projects would move ahead together because of their large requirements for steel, labour and services.

The APG, Canada’s largest aboriginal enterprise, holds a one-third stake in the Mackenzie Valley project.

“Come November, unless we have access and benefits agreements in place and there is fiscal certainty with the federal government, then shutting down the project is a very real option,” Mr. Reid said. “ The APG certainly doesn’t want to see that happen. That would be terrible for the aboriginal community.”

Some of the same First Nations that support the APG are also in talks with pipeline proponents Imperial Oil Ltd. and its partners for separate deals called access and benefits agreements.

They involve fees paid for access to their lands, construct and maintain the pipeline, as well as benefits like contracts and jobs.

Mr. Kakfwi, a negotiator on the deals for Fort Good Hope, said the key disagreement is that First Nations along the route — the Gwi’chn, Sahtu and Deh Cho — want to impose a property tax of $47-million a year, while Imperial is offering “small” one-time payments.

“We are trying to establish the fact that aboriginal governments should have identifiable sources of revenue to sustain themselves like other levels of governments,” Mr. Kakfwi said. “Why should we be the only government in Canada that lives on handouts and benevolent payments? It’s the principle.

The sum is in addition to $500-million for socioeconomic benefits in the North pledged by the federal government.

“We never asked for the $500million. We always said we want to collect $47-million a year, and the federal government came along with $ 500- million, and that will help out, but our interest is in the $ 47- million,” Mr. Kakfwi said.

Imperial said the aboriginal deals, and fiscal terms with the federal governments, must be ironed out before the project moves into a lengthy public hearing stage.

Brendan Bell, the Energy Minister of the Northwest Territories, was so concerned about the lack of progress this week he called on Ottawa to step in and propose arbitration.

The pipeline’s future has been uncertain since April, when Imperial and its partners — ExxonMobil Corp., ConocoPhillips, Shell Canada Ltd. and APG — halted all field work because they were unhappy with aboriginal expectations and the readiness of regulators to proceed efficiently.

If the pipeline is shut down, aboriginals would lose the $500million in federal money, dividends from their stake in the APG and benefits in exchange for land access, Mr. Reid said.

Financial Post

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