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Millions needed for pipeline

First Nations expect to seek help from federal government

Northern News Services

Yellowknife (Aug10/01) - Aboriginal groups can scrape together about $25 million of the the $60 million they need to get a Mackenzie Valley pipeline off the ground, it was revealed here last week.

Aboriginal Pipeline Group members George Gerlach of Shell, Wilf Blonde of Inuvialuit Development Corp., and Doug Cardinal met with Fort Simpson residents during a meeting last week. - Dave Sullivan/NNSL photo

But Aboriginal Pipeline Group (APG) representatives said the rest of the money to pay for First Nations' share of a $160-million planning stage will have to come from taxpayers, either in the form of loan guarantees or grants.

That would get them through the three to four years of planning.

More would be needed when construction began.

"We would have to raise a billion dollars, of which 30 per cent would have to be equity. The aboriginal people don't have that kind of money, but if all the aboriginal people coming together, we can ask the federal government to assist us," APG representative Wilf Blonde told the meeting.

The APG group negotiated a deal with producers allowing aboriginal communities to own up to a third of a Mackenzie Valley pipeline.

The Deh Cho First Nations pulled out after leaders said it was a poor deal for them. Forty per cent of the 1,400-kilometre pipeline would go through DCFN land.

A second proposal

A second pipeline proposal from Arctic Resources Corporation (ARC) says aboriginals can own the entire pipeline. That company had a public meeting similar to APG's in Fort Simpson two weeks ago.

ARC is promoting a pipeline through the Mackenzie Valley that would carry Alaska gas in addition to Canadian gas from the Beaufort Delta.

That proposal does not have any support from the companies with the most oil and gas holdings in the delta -- ExxonMobil, Esso, Conoco and Shell.

"ARC's proposal would not be financeable without significant backstopping," said a letter from Esso President K.C. Williams to APG chair Nellie Cournoyea. The letter stated that financial guarantees would "negatively impact the commercial viability" of a pipeline investment.

ARC proposal booster Winter Lennie said the pipeline would be financed by advance sales of gas.

Lennie, president of a Sahtu-owned company in Norman Wells, questioned the Inuvialuit Regional Corp.'s (IRC) role on APG. They stand to make huge financial gains without needing an ownership stake, he said.

Cournoyea also chairs the IRC, which has strong business links with Esso. According to research done for ARC, Esso paid IRC a $1 million advance plus pays $200,000 a year to access some gas holdings, in addition to an eight per cent royalty it will pay when gas flows.

IRC chief financial officer Wilf Blonde said IRC also owns 25 per cent of gas reservoirs North of Inuvik.

The business ties make IRC "a significant producer. They couldn't care less if they owned a percentage of the pipeline," Lennie said.

Esso's parent company ExxonMobil is one of the main producers of Alaska gas. Esso representatives say that fact makes the pipeline issue "very complex" for the parent company and Esso subsidiary, and that so far Esso Canada is operating independently from ExxonMobil.

Esso's Randy Ottenbreit said ExxonMobil has not decided if it would support a proposal competing with the Mackenzie Valley project. The Alaska government is pushing for a pipeline along the Alaska Highway and through Yukon.