Postponement threatens pipeline
Key deals unresolved as project threatens to falter
Gordon Jaremko
The Edmonton Journal
canada.com
Wednesday, September 21, 2005
EDMONTON - Northern pipeline hearings have been postponed until 2006, prompting the Northwest Territories government to warn Tuesday the $7-billion Mackenzie Gas Project could be shelved.
The lag gives Alaska a chance to seize the lead in arctic natural gas development, territorial energy minister Brendan Bell said. "We can't afford to be caught in that wake. We're concerned about a real, material delay."
In letters to the National Energy Board and the northern gas environmental Joint Review Panel, Mackenzie project leader Imperial Oil says "key areas remain unresolved" and it will take until November to decide if enough progress has been made to justify holding regulatory hearings. The agencies say they need two months to swing into action after the industry consortium says the project is a go.
"Benefits and access agreements have not been concluded" with aboriginal communities on the Mackenzie Delta, where gas would be produced, or along the 1,222-kilometre path of the proposed pipeline through the Mackenzie Valley to northern Alberta.
"The fiscal framework for the project has not been agreed to with governments," the letters added.
"We would like more clarity," project spokesman Pius Rolheiser said. Unsettled money issues include federal, territorial and aboriginal gas production royalties plus corporate taxes on the pipeline. "I wouldn't characterize this as a delay," Rolheiser said, although he added that the project will review its current schedule calling for northern gas to flow by 2010 before any regulatory hearings begin.
No immediate deadlines were imposed on northern negotiations. But the Mackenzie consortium of Imperial, Shell Canada, ConocoPhillips Canada and ExxonMobil Canada does not have unlimited time, he said.
"While we've stated we're committed to using as much time as it takes to do the project properly, everyone needs to recognize that, yes, there is some urgency. For Mackenzie Delta gas to be viable it needs to come to market before Alaska gas, just because of the size of the Alaskan development," Rolheiser said.
Canadian gas would be shoved off the market and American firms would corner northern project essentials from steel to pipeline construction workers, because the Alaskan megaproject is about four times bigger than the Mackenzie plan.
"There will be a fast-track Alaskan project," Bell predicted in a telephone interview from the New Brunswick resort town of St. Andrews, where he raised the northern gas project's concerns at the annual meeting of Canadian energy ministers.
Hurricane Katrina, plus threats of more storm damage to production in the Gulf of Mexico, fanned oil and gas supply concerns in the United States into "what really amounts to an energy crisis," Bell said. Washington already offered loan guarantees to the Alaskan pipeline project.
The territorial government will urge northern aboriginal leaders to recognize they do not have unlimited time to hold out for concessions from the Mackenzie project, Bell said.
"The message we need to send is that things have changed. There is a new urgency post-Katrina."
But native communities will not drop a demand for a $47-million annual pipeline transit fee or property tax that has been a sticking point in the negotiations for a year, said former territorial premier Stephen Kakfwi, now a benefits negotiator for the Sahtu in the central Mackenzie Valley. The Deh Cho along the southern 40 per cent of the pipeline are allied with the Sahtu on the transit fees and special payments are also sought by the Gwich'in along northern parts of the route, Kakfwi said.
Training, jobs and contracts offered by the gas consortium would only spin off temporary benefits to a minority of the territorial population, he said.
"The majority of our people will just stay dirt poor," Kakfwi predicted. The tax would finance roads, water and sewer services, cultural centers and recreational facilities. "We just want a better standard of living."
The territorial government will work with Ottawa to devise new options for helping the project on top of a 10-year federal commitment, announced in July, to create $500 million in northern community development trust funds, Bell said.
Independent arbitration could be offered as a way to settle the pipeline transit fee dispute, he suggested. But Rolheiser and Kakfwi indicated neither side is interested in adding new legal or regulatory procedures.
"I'm ready to go," Kakfwi said. The main obstacle facing the project is its lack of territorial and federal fiscal agreements rather than native leaders who obtained the trust funds from Ottawa while also persuading the Deh Cho to drop a protest lawsuit and co-operate with development. "The fact is we're about a year or year-and-a-half behind schedule," Kakfwi said. "It would be too bad if the project's stalled. Everybody has to take responsibility and Imperial will have to take 50 per cent of the blame."
gjaremko@thejournal.canwest.com |
