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Canadian Government Agrees to Meet Aboriginal Demands for Mackenzie Pipeline

Federal and Northwest Territories governments are trying to rescue Canada's arctic natural gas pipeline project by making a deal on community services along the proposed Mackenzie Valley pipeline route, but whether the approach will do the job remains to be seen.

The new agreement, reached in Ottawa, is a preliminary commitment by the federal government to help cover costs of roads, schools, health clinics, cultural programs and other demands from aboriginal communities. Details were left open to be settled later, including the value of the federal commitment, how much the cash-strapped territorial government will have to contribute and whether the arrangement will be acceptable to native leaders.

Officials of the stalled C$7-billion Mackenzie Gas Project said they were encouraged that the governments have made a prompt start on sorting out responsibilities for fulfilling expectations raised by the development. But the sponsors consortium of Imperial Oil, ExxonMobil Canada, ConocoPhillips Canada and Shell Canada kept its own expectations realistic by describing northern issues as complex and predicting they will take some time to resolve.

The pipeline project would include a 758-mile natural gas line to transport up to 1.9 Bcf/d to Canadian and U.S. markets. It would extend from the Mackenzie River delta region into the province of Alberta to an interconnection with TransCanada's Alberta system. The project also would include a 298-mile pipeline to transport gas liquids from the delta to a point of interconnection with the Enbridge Pipelines system at Norman Wells, NWT.

Sponsors filed a 6,500-page application with federal officials last October to work toward an April 27, 2005 deadline with the National Energy Board (NEB). In March, however, the board extended the written filing deadline to July 15. The regulatory delay and continuing demands of aboriginal groups prompted Imperial and the other sponsors to halt work on the project at the end of April.

The preliminary agreement, announced by territorial Premier Joe Handley and Deputy Prime Minister Anne McLellan, emerged from discussions set off by the Mackenzie group's April 28 announcement that project work has been suspended due to inability to resolve outstanding issues with northern communities. The issues included demands for special land access payments and local taxes for aboriginal communities.

Among the complicating factors on the northern scene, native communities have asked for direct deals with industry on grounds that their history has shown they cannot trust either the federal or territorial governments. The attitude was voiced again by aboriginal leaders such as former territorial premier Stephen Kakfwi following the announcement in Ottawa. The next step will be discussions between the territorial government and native leaders.

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