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Report favours valley route

Consultant says 'over the top' is out of reach

Terry Halifax
Northern News Services

Inuvik (Aug 23/02) - A new report issued by a Calgary company says the Mackenzie Gas Project is the best deal for the Gwich'in.

NNSL photo

Carl Chala, vice president of business development for the Gwich'in Development Corporation, said the report compiled by the Canadian Petroleum Engineers favours the Mackenzie Gas Project over the Arctic Gas 'over the top' route. - Terry Halifax/NNSL photo

In a report commissioned by the Gwich'in Development Corporation, the Canadian Petroleum Engineers say the plan proposed by the producers group and the Aboriginal Pipeline Group (APG) offers more in benefits than the proposal from the Northern Route Gas Pipeline Corporation (NRGPC) and its subsidiary, ArctiGas Resources Corp. (ARC).

Last May, the board of directors of the Gwich'in Tribal Council had asked the GDC to do a review of the two proposals to see which offered the best benefits for the Gwich'in people. GDC vice president of business development Carl Chala said the sent the study out because the GDC needed an expert opinion.

"We had looked at this and because it's such a significant project, we wanted to get some expertise involved," Chala said.

The study prepared by the Canadian Petroleum Engineers used public information and interviews with the Aboriginal Pipeline Group, Imperial Oil and the NRGCP/ARC.

The study focused on key issues, the project overview, issues and assumptions, risks, ownership and benefits. Chala said the Mackenzie project exceeded the over the top route in every comparison.

"Out of the benefits and potential long-term economic sustainability of this region, you want to make sure that Canadian gas gets to market first," Chala said.

Keeping the exploration activity and extraction alive in the Delta is key to economic growth, Chala said.

Valley plan has fewer political hurdles

The report said the Mackenzie Gas Project has the least amount of risk and least political hurdles to cross.

Most importantly, Chala said, the energy companies will not relinquish control of the line.

"The producers have said 'No,' and have not moved forward at all to that side," he said. "You need the producer's support in order to move forward with a pipeline."

Chala said the report said the risk of laying pipe under the ocean was minimal and running a line to Prudhoe Bay may be considered by the Mackenzie Gas Project at a later date.

"There is no problem with that; there have been many pipelines built underwater before," he said.

"If we have the Mackenzie Valley one done first, there is no precluding us from tying in over the top at a later point -- that is still open."

In the issue of control and ownership, the reports finds that both plans come out equal, despite the ARC's 100 per cent aboriginal ownership plan.

"You still have signed a management agreement that gives full control and authority to ArctiGas Resources to manage the project and in the other scenario, APG is still minor shareholder," he said.

"In both cases they're even."

The ARC proposal is financed through the sale of bonds, based on shipping contracts, which in effect places ownership with the bond holders.

"It's like buying a car and using the bank to buy it for you; the bank still owns it until you pay it off," he said. "If you don't pay off the bond holders, they take control of it."

Chala said the GDC are very pleased with the report and hopes it will help the Gwich'in move forward with the APG plan.

"It gave us the kind of confirmation that we are moving in the right direction," Chala said.