Support for a Mackenzie River Valley natural gas pipeline through the Northwest Territories made the news again last week, as aboriginal interests — considered key to any plan — began signaling their approval to begin construction of a pipe through their lands. While the producers group on Tuesday touted the support of the Acho Dene Koe in its carefully detailed memorandum of understanding (MOU) to back a C$3 billion pipe, still another group, composed of development corporations and businesses — no producers — emerged on Thursday offering a 100% aboriginal ownership of any pipe built.

The Mackenzie Delta Producers Group, made up of Imperial Oil, Exxon Mobil Canada, Shell Canada and Conoco Canada, last week gained another signature for its MOU, an agreement drawn up last spring to outline mutually acceptable terms under which a gas pipeline could proceed (see NGI, June 11). The MOU was drafted by the producers and the Mackenzie Valley Aboriginal Pipeline Group, which represents the First Nations in the Mackenzie Valley.

As meticulous as the producers have been to secure the support of the aborigines, another log was thrown in their path on Thursday, when the North American Aboriginal Pipeline Corp. emerged. Based in Fort Simpson NWT, the group — which includes no producers so far — said it has begun to assemble C$6 billion in financing by issuing bonds in the same way money is raised for municipal projects. The group, backed by two Metis development corporations and 15 businesses located along the Mackenzie Valley, said it will finance a pipe that would give the aboriginal interests 100% ownership. The strategy mirrors that of Houston-based Arctic Resources Co. (ARC), headed by Forrest Hoglund, who holds a lengthy producer resume (see NGI, July 2).

Similar to ARC’s plan, the North American Aboriginal Pipeline Corp. would use tolls from transporting the gas to pay back the bond holders. Backers estimate tolls could generate between C$100 million and C$150 million a year in profits. Even though corporation’s leaders, Walter Blondin acknowledged that the group has so far not negotiated with any producers, he is confident the newest scheme will work.

Blondin said the business group would not “block them,” referring to the producers, but he stated bluntly that “they’ve got to cross our land.” He said the business corporation would suggest to the producers to “do the right thing.”

The producers group has acknowledged that it cannot proceed with laying a pipe without unanimous aboriginal support, and though it is slowly garnering signatures from the various aboriginal leaders, there have been holdouts and some reservations by aboriginal leaders who have already signed the MOU.

Under the proposed MOU, the aboriginal peoples, represented by the Mackenzie Valley Aboriginal Pipeline Corp., would have one-third target participation and ownership in the pipeline. That ownership would be equivalent to a right to initial capacity of 400-500 MMcf/d, under the agreement. The proposed pipeline would start at the outlet of a facility located near Inuvik and extend to pipeline infrastructure in northwestern Alberta, including intermediate compressor stations. Initial shipping needs of 800-1,000 MMcf/d are expected from existing discoveries in the delta, totaling an estimated 5.8 Tcf.

While some aboriginal leaders readily agreed to terms, the 10 communities under the Deh Cho First Nations initially refused to sign the MOU until several issues were resolved, including outstanding land claims, benefits, access fees and royalties. Some of those issues will be negotiated with the Canadian government, according to the producers group. Some of the Deh Cho also want full aboriginal ownership, like the ARC and new North American Aboriginal Pipeline proposals. The Deh Cho and some Sahtu landowners already agreed to endorse ARC’s proposal, and together, the Sahtu and Deh Cho lands represent about 70% of the land in the Northwest Territories.

However, gaining the support of the Acho Dene Koe of the lower Northwest Territories is considered a major victory for the producers group, which so far has remained uncommitted in a timeline to move a pipe forward. The Acho Dene Koe have been involved in exploration and production of the Fort Liard gas play since 1994 where production has reached about 200 MMcf/d.

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