Cost of land right-of-ways central to decision to halt work on pipeline
canadaeast.com
JAMES STEVENSON
CALGARY (CP) - The decision to halt operational work on the $7-billion Mackenzie Valley pipeline in the Northwest Territories boils down to how much the project should pay for right-of-way access, the head of TransCanada Corp. said Friday. "The question is what is the value of right-of-way for a pipeline," chief executive Hal Kvisle said Friday following the large pipeline and energy company's annual meeting in Calgary.
"What we're trying to do is move gas from Inuvik to Alberta and we think it should be done on the same economic basis that occurs in the rest of Canada," he said.
"One of the points we have made to the federal government is there are many pressing social needs in the Territories - hospitals, education, dental care, many other things - and local communities have asked the pipeline project to provide all of these."
"We don't think that's right. We think these are things that are matters between the federal government and the people that live there."
In explaining the decision to shut down "project execution activities," Imperial Oil said Thursday that private and commercial negotiations between various groups and communities along the pipeline route were totalling "into the hundreds of millions of dollars."
In a similar refrain, the chief executive of Shell Canada said Friday that a new approach is needed if the project is to proceed.
"Believe me, it's not posturing," Shell chief executive Clive Mather said outside his company's annual meeting, also in Calgary.
Imperial (TSX:IMO) and Shell (TSX:SHC) are joined in the pipeline consortium with international energy giants ExxonMobil and Texas-based ConocoPhillips (NYSE:COP).
The group has been working on the project for years and a major milestone was passed last October when the group filed their long-awaited regulatory applications for the project.
But there has been little progress since, with the energy companies saying they are being hampered by things well beyond the responsibility of the project, like land-claims issues.
Mather told Shell shareholders Friday that continuing to spend money to develop the proposed pipeline with no visible progress would be "irresponsible."
The energy companies involved in the pipeline all say that the project has not been shelved, but rather delayed all engineering and preparatory work halted until these larger "foundation" issues are dealt with.
"This decision was based on one thing - and one very important thing - and that is that we feel that this project is do-able," Imperial vice president Michael Yeager said Thursday.
Imperial, which has lead the charge over recent years to get the pipeline built, called upon federal and territorial governments, as well as aboriginal groups to help resolve the issues.
In Regina on Friday, Prime Minister Paul Martin said the issue wasn't a question of too much red tape involved in the regulatory process.
"What we really do hope is that the discussions that are taking place with certain of the First Nations who are involved will be able to progress and that obviously we are working with the government of the Northwest Territories to ensure that that happens."
The decision to halt work could be a major setback for the mega-project, which called for a pipeline stretching about 1,220 kilometres south from the Mackenzie Delta in N.W.T. to existing pipeline networks in northern Alberta.
The pipeline is intended to meet the growing demand for natural gas as conventional supplies throughout North America continue to wane. It is also seen by many as a much-needed source of income and job creation in Canada's North.
TransCanada, which has a small stake in the consortium, said Friday that other jurisdictions in Canada have ways to deal with right-of-way claims.
"Inevitably no matter where we build pipe, there are some land owners that are unsatisfied with the compensation we offer," said Kvisle.
"And there are tribunals and other processes in place that will achieve an arbitrated outcome for compensation in those circumstances."
"That's the kind of thing that we're suggesting to the government that needs to be put in place, we have to have some economic benchmarks as to what do you pay for access."
Kvisle said the pipeline consortium had hoped it could avoid most of these problems by giving the Aboriginal Pipeline Group a one-third stake, representing numerous N.W.T. aboriginal groups who support the pipeline.
"The APG pipeline group is seen as a completely separate and distinct thing from getting right-of-way through the territories."
One group that has opposed the pipeline plans is the Deh Cho First Nation. About 40 per cent of the proposed pipeline route is currently within Deh Cho lands, which cover virtually the entire southwest corner of the N.W.T.
The Deh Cho have been attempting to get Ottawa to settle their outstanding land claim before the pipeline is developed and has taken the federal government to court over the impending environmental review process. |
