Mackenzie Project Sponsors Have Many Other Hurdles to Cross

Although one hurdle has been cleared from the path of the C$7 billion Mackenzie Valley natural gas pipeline, many remain, project sponsors emphasized. The economic development deal signed by the Canadian government and the Deh Cho First Nations resolved only one of the major issues preventing development of the long proposed project (see Daily GPI, July 12).

"It's encouraging," Mackenzie Gas Project spokesman Hart Searle said after federal Indian Affairs Minister Andy Scott announced the deal with the Deh Cho community along the southern 40% of the proposed northern pipeline.

"Certainly the halt to this one legal action is a hopeful sign. But that's just one piece of a bigger picture that still needs work," Searle said. Remaining obstacles include a second aboriginal protest lawsuit, by the Dene Tha' in northern Alberta, and unfinished negotiations on land access and economic benefits agreements with native communities across the Northwest Territories.

Deh Cho Grand Chief Herb Norwegian affirmed that is still a long way from being out of the woods as a result of the lawsuit settlement. "It does not mean the Deh Cho First Nations support the pipeline," Norwegian said. "We still have some very difficult negotiations ahead with the oil companies that want access to our lands."

While Canadian Finance Minister Ralph Goodale predicted over the weekend that the US$15 billion Alaska project will come second in the international race to tap northern gas, the Mackenzie group has yet to set a new schedule.

Field operations on the C$7 billion (US$5.6 billion) Mackenzie project were suspended in April until land access, benefits packages and an orderly northern regulatory process can be established. The pipeline completion target, originally 2009 or 2010, showed signs of slipping even before the consortium called time out. The negotiating effort continues including work towards a "common" or standardized agreement with communities along the 800-mile pipeline route, Searle said.

The Mackenzie consortium of Imperial, Shell Canada, ConcoPhillips Canada and ExxonMobil Canada is due to clarify its plans later this week. The National Energy Board has directed the group to say whether it will be ready for northern pipeline hearings on schedule in late summer or early fall. If a postponement is sought, the NEB wants the gas companies at least to set a deadline for picking a hearings date.

Exchanges of voluminous written evidence between the project's owners, other industry groups and public interveners continued before the board in Calgary after field operations halted. Similar work has kept going before an environmental Joint Review Panel of northern agencies in Yellowknife.

"Things appear to moving in a better direction," Searle said. "Is everything wrapped up yet? No. We'll have to take stock. One marker will be the response to the NEB." The stock-taking will include reviewing the lawsuit settlement between the Deh Cho and the federal government. "We will need time to assess the agreement. We need clarity about what it means to us," Searle said.

The deal gives C$21 million (US$17 million) to the Deh Cho. The total includes C$6 million (US$4.8 million) to participate in Mackenzie project regulatory reviews and C$15 million (US$12 million) to take advantage of gas industry business opportunities.

The money may eventually be deducted from future compensation by a land claim agreement now under negotiation. The lawsuit settlement also pledges that the future land claim deal will give the native community a new Deh Cho Resource Management Authority, a say in oil and gas exploration, and a watchdog role over the pipeline's environmental and economic effects.

Copyright 2005 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.


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