Mackenzie Delta Pipe On Hold Until MOU Signed

A producer group and aboriginal leaders from Canada's Northwest Territories failed to reach a deal last week giving the native peoples a one-third stake in the proposed Mackenzie Delta pipeline after some native leaders said they wanted more time. Optimism remained high that an agreement could be reached in the next few months, and both sides stressed that the deal isn't dead, just postponed.

Following two days of talks at the Aboriginal Leaders Conference in Hay River, the producer group, composed of Imperial Oil Resources, Gulf Canada Resources Ltd., Shell Canada Ltd. and Exxon Mobil Canada, said jointly that it expected an agreement soon, which would outline mutually acceptable terms under which a pipeline could proceed.

According to the producers group's proposed memorandum of understanding, 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 C$3 billion 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.

"We are encouraged by the support that was shown for the proposed memorandum, and we realize that work still needs to be done," said K.C. Williams, senior vice president of Imperial Oil, who spoke on behalf of the producer group. "We are breaking new ground, and the discussions are complex."

We are prepared to take the time necessary to understand the reasons why some parties were not prepared to sign the memorandum," Williams added. "We consider the support of the aboriginal peoples of the North vital to any Mackenzie Valley pipeline development." Imperial is the largest resource-holder in the Mackenzie Delta region.

The producers have been working on the MOU with the Aboriginal Pipeline Group to define principles that would guide future development in education, training, employment and business; land access; pipeline ownership; route selection; support through the regulatory process; environmental assessments; and abandonment.

"The producer group is encouraged by the progress we've made to date, and we appreciate the opportunity to participate in the Aboriginal Leaders Conference," Williams said. He added that the producers were "grateful" to the leaders for their work in negotiating the principles that "they believe represent the interests of their people."

Following the talks, 38 aboriginal leaders at the conference endorsed the MOU, several signed with reservations and others said they wanted to discuss it with their people.

"We need to take the MOU back to our region," said Michael Nadli, grand chief of the Deh Cho Nation. "Right now we have concerns we feel need addressing." He said the issues on the table were too important for just the leaders to decide, and said his people would make their decision within the next few months. The producers group said the extra time was not a problem.

Earlier this week, the Ottawa-based National Round Table on the Environment and the Economy released a long-awaited report that suggested the Ottawa government invest at least C$100 million in the Arctic to jump start economic development there. Aside from additional investments in infrastructure or the proposed natural gas pipeline, the report noted money is needed now to improve the regulatory and investment climate in the region as it relates to the aboriginal peoples living there.

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