Even though a natural gas pipeline would cut across Canada en route to the Lower 48, Canadian officials should back off while U.S. officials decide whether to offer subsidies on a proposed Alaska pipe, Gov. Frank Murkowski said at a Calgary energy conference this week.

The on-again off-again pipeline now is undergoing scrutiny as part of the proposed U.S. energy bill (see Daily GPI, Sept. 16), but Murkowski stressed that the proposed Alaska pipe is an issue to be addressed by Americans and not Canadians. Murkowski was in Calgary to attend a Far North Oil & Gas conference sponsored by Insight Information.

“I don’t think it’s an issue of the Canadian government necessarily,” Murkowski told the Canadian press. “We do not interfere or comment on your own decisions on making incentives at whatever level you see fit on your own projects, and we expect the same courtesy when we make decisions.”

Canada opposes subsidies for building an Alaskan pipe because of concern that it could skew natural gas markets and affect gas sales from an anticipated pipeline running south from the Mackenzie Delta through the Northwest Territories to connections with Canadian mainlines. Canadians have cited the North American Free Trade Agreement (NAFTA) in arguing against subsidies that would distort the market.

However, Murkowski said during the conference that without subsidies, the Alaska pipe would not be built and the United States would have to rely more on imported gas. “Without a tax credit there will very likely be no project at all,” he said.

Stephen Kakfwi, premier of the Northwest Territories, also spoke at the conference, and said he is confident that his province will obtain an oil and gas revenue-sharing agreement with Canadian officials before Prime Minister Jean Chretien leaves office, which would continue development plans for a Mackenzie Valley pipe.

Kakfwi, who has been a strong proponent of the Mackenzie gas pipeline, said he thought Canadian officials would “do the right thing” and give the territories a larger share of energy revenues, one of his key requests in moving the proposed C$5 billion gas pipe forward. The Northwest Territories only have a population of 43,000 and less authority than Canadian provinces, giving the region less ability to secure federal energy revenues.

“The confidence is there,” said Kakfwi. “The signals are there. The stage is set for many of these things to happen.”

Already, he noted, the territories are thriving from diamond mining, but more cash will be needed to pay for infrastructure to support a new energy industry when the Mackenzie pipe is built.

“Yes, we’ll support development, yet we don’t have the resources or the money to build roads, schools, or to provide nurses, teachers and police,” Kakfwi said. “We know our land is producing and we want to share in it to take care of ourselves.”

A few months ago, the Mackenzie Valley pipe proposal got a major boost when a key aboriginal group and a consortium of producers signed an agreement to construct a pipe that would link the far northern fields to U.S. markets via the Northwest Territories and Alberta (see Daily GPI, July 1). The Mackenzie pipe, said Kakfwi, would create C$3.65 billion in gross domestic product for Alberta; C$2.26 billion in labor and 38,0000 person years of work for the region.

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