Ottawa set to give Imperial concessions
Aims to get Mackenzie pipeline on track
By DAVE EBNER AND SIMON TUCK
Friday, November 18, 2005 Page B1
CALGARY, OTTAWA -- Ottawa is ready to make major concessions to Imperial Oil Ltd. so that the stalled $7-billion Mackenzie Valley natural gas pipeline proceeds.
In a letter to Imperial, dated Wednesday, Deputy Prime Minister Anne McLellan said "the Government of Canada is committed to working with you to explore options for its participation in the project."
The options -- which Ottawa hopes to have settled by next summer -- include taking natural gas in lieu of cash royalty payments.
Another option is for the federal government to provide a loan guarantee to the Aboriginal Pipeline Group, helping the group pay for pipeline development so it can secure its long-planned equity stake in the project.
"There are a wide range of tools that could be used to assist and meet both the producers' and our shared objectives," Ms. McLellan told reporters in Ottawa. She said the government is offering concessions because the north is an undeveloped "frontier."
Ottawa's letter indicated that Imperial -- which is the project's main proponent -- had told the federal government it wants breaks on issues totalling $1.2-billion.
Imperial said it was pleased with the letter and added it now only needs agreements with northerners for land access deals before it is ready to go ahead with public hearings on the project.
"It gives us significant confidence," Imperial spokesman Pius Rolheiser said.
Imperial said to the National Energy Board yesterday that it plans to tell the regulator next Wednesday whether it is ready to begin public hearings. The NEB had wanted to hear from Imperial today, but said it would wait until next week.
Land access deals are not yet finished but are progressing well.
Northern communities met Wednesday night and were set to meet again last night to discuss details of Imperial's proposals for land access.
"The fact that meetings are under way, you can draw your own conclusions," Mr. Rolheiser said. "But until agreements are ratified, they aren't agreements."
Last week, a top northern leader -- Nellie Cournoyea of the Inuvialuit in the Mackenzie Delta -- said a deal was "very close."
The 1,220-kilometre pipeline would connect three big gas fields in the delta with northern Alberta, opening up a prospective frontier basin for major exploration.
The potential is significant. Devon Energy Corp. next month will start drilling in the Beaufort Sea and hopes to hit a target as large as the biggest field in the nearby Mackenzie Delta, a discovery controlled by Imperial.
Imperial is majority owned by Exxon Mobil Corp., which last month reported the largest quarterly profit in corporate history, booking almost $10-billion (U.S.) on its bottom line for the July-September period.
Ottawa said it was thinking about "various forms of federal investment in one or more components of the project," although Ms. McLellan stressed that "the government of Canada is not prepared to subsidize the construction."
Imperial in April halted most work on the project, blaming what it called unreasonable demands from northerners for land access and a slow regulatory process. Ottawa in the summer promised $500-million (Canadian) for northern economic and social development, but Imperial said it wasn't enough.
"We have a request for fiscal enhancements . . . and this letter reiterates we will look at in good faith that request," Ms. McLellan said to reporters. "What comes of that review, we will determine in the weeks ahead." |
