Feds deny interest in share of proposed Arctic pipeline
Dehcho leader rejects resource sharing deal
Petrowest Energy Services signs MOU with Woodland Cree First Nations
Feds deny interest in share of proposed Arctic pipeline
By Bob Weber
Federal government and industry sources were quick to deny reports published May 18th that Ottawa is considering taking an equity stake in the proposed Mackenzie Valley natural gas pipeline.
“(The government) is not considering ownership of the Mackenzie gas project and I have conveyed this message directly to the proponents,” Indian Affairs minister Jim Prentice said May 18th in a press release.
But the Aboriginal group planning to take a one-third share in the megaproject still says public ownership of at least part of the project would be a good idea.
“If (the pipeline proponents) don’t think it’s sufficient returns for them but it’s still profitable, then I would encourage them to step aside and let this pipeline get built,” said Fred Carmichael, head of the Aboriginal Pipeline Group.
“If it takes government to do that, let’s open up this country.”
That’s exactly what one report published the morning of May 18th said the federal government was considering.
But in addition to denials from Indian Affairs, a spokesman for Imperial Oil (TSX:IMO), the main proponent, said the company has no intention of abandoning the pipeline.
“The project is not dead and we did not advise the government that it was,” said company spokesman Pius Rollheiser in Calgary. “We’re not interested in stepping aside.”
The proponents have spent $600 million on the project so far.
Carmichael said the possibility of a share for the government was raised during talks on a fiscal framework for the deal.
“(The talks) are in a very preliminary stage,” said Fred Carmichael of the Aboriginal Pipeline Group, which plans to take a one-third share in the project.
“We’re always looking at options. There’s a lot of stuff out there because of the delays.”
But Prentice denied even that.
“The federal government has absolutely no interest and no role in directly subsidizing a private sector project,” he said.
“These issues have not been under discussion by the government, either with the proponents or Aboriginal groups.”
Prentice said the pipeline might make sense as a common carrier, a pipeline that is obliged to ship all gas offered to it, prorating capacity when demand exceeds supply.
Progress on the pipeline, seen as crucial to the economic development of the Western Arctic, has been repeatedly slowed by regulatory tangles, legal actions and soaring costs.
Hearings that were supposed to be completed last fall are running about a year behind schedule due to information filings by Imperial Oil (TSX:IMO) and court rulings that some Aboriginal bands along the route haven’t been adequately consulted.
As well, the budget for the 1,200-kilometre line had grown from $3.5 billion when it was originally proposed to the most recent estimate of $16.2 billion.
Imperial has pushed back its own timeline by three years, meaning the pipeline wouldn’t start producing until 2014.
Faced with increasing costs and delays, Imperial has said the project wouldn’t be economic without some government inducements such as loan guarantees or acceleration depreciation.
A federal ownership stake might have long-term advantages in ensuring that all Mackenzie gas – not just that owned by the three pipeline proponents – could find a way to southern markets, Carmichael said.
“If we had federal government participation, it would certainly make this true northern infrastructure (and) make sure that this is truly a basin-opening project.”
Imperial, ConocoPhillips and Shell (TSX:SHC) own the largest proved gas reserves in the area. But other companies have been exploring throughout the Mackenzie Valley and have expressed concern to the National Energy Board that current pipeline plans would make it hard for them to find room for any gas they find.
“I would think the explorer’s group and the rest would welcome the government with an equity in (the pipeline),” said Carmichael.
Carmichael suggested that Imperial may be setting the profit bar too high.
“We’ve come a long way with the producers, but my preference would be whoever wants to get the project back on track.”
Carmichael said the pipeline would be a good investment for Canada. The project would not only open up trillions of cubic feet of natural gas, but would also provide a huge and irreplaceable economic boost for the region.
Most Aboriginal bands along the proposed route support the project and are members of the Aboriginal Pipeline Group.
One group, the Dehcho First Nation in the southeast corner of the Northwest Territories, continues to hold out.
Dehcho leader rejects resource sharing deal
Submitted by Dehcho First Nations
The much-touted Resource Revenue Sharing Agreement-in-Principle signed recently by the Government of the Northwest Territories and four Aboriginal groups is nothing more than “crumbs from the GNWT table,” Grand Chief Herb Norwegian said recently. He added that the “pathetic deal” was reached behind closed doors and behind the backs of the Dehcho First Nations (DFN) who were not even invited to the talks.
“It’s incredibly weak, badly defined and far behind anything the Dehcho would consider. We are the only people in the North who think the current royalty regime is unacceptable and we say so publicly.”
The agreement with the Inuvialuit, Gwich’in, Sahtu and the NWT Metis Association and the GNWT would give each party a share “of up to 25 percent” of a so-called “Net Fiscal Benefit” for political development and government programs and services. The four Aboriginal parties therefore get 3.57 percent of these ‘Net Fiscal Benefits’ – the “crumbs” referred to by Norwegian.
The DFN leader accused the GNWT of pursuing its devolution agenda in secret and using First Nations to promote “a dead dog.” “It seems to me that this secret agreement is just another crude way of trying to pressure the Dehcho to fall into line, while at the same time trying to fool the feds (Canada) that they have some political momentum up here to throw their weight around at the negotiating table.” Norwegian said Premier Joe Handley wants this “bad deal in place before he leaves office to undermine the DFN.”
He also charged leaders of the Aboriginal Pipeline Group and their supporters with helping “cook up” this deal “behind our backs, to take away any leverage we have in negotiating our land issues with Canada. They sold off their rights for these crumbs and now they want to take away our strength at the table. This agreement shows what happens when the Dehcho are not at the table.”
DFN has just recently signed two agreements with Canada and the GNWT that continue the Dehcho Land Use Planning process and sets target dates for finalizing the Dehcho Land Use Plan. “This GNWT thing does nothing for First Nations,” Norwegian said.
“The right direction to take is the way we are going, via a land use plan developed through an open and transparent process, not these back door deals,” Norwegian said.
He also noted that the Tlicho and Akaitcho First Nations have not signed onto the agreement.
Petrowest Energy Services signs MOU with Woodland Cree First Nations
Petrowest Energy Services Trust (TSX:PRW.UN) is reporting a first-quarter loss of $2.2 million, a First Nations deal and the $94.2-million purchase of five road construction, gravel-crushing and log-hauling businesses in Alberta and British Columbia.
The firms operate in the Grande Prairie and Peace River regions of Alberta and the Fort St. John region of B.C. and generated revenue totalling about $76.6 million in the last financial year, Calgary-based Petrowest said May 10th.
Petrowest announced it has signed a memorandum of understanding with the Woodland Cree First Nations (WCFN) for a joint venture in which Petrowest provide services within WCFN traditional lands covering over 9,800 square kilometres, including part of the Peace River oilsands.
Petrowest would acquire road construction equipment from a subsidiary of the WCFN, Woodland Cree Industries Ltd., for $4 million.
“Taken together, these acquisitions significantly enhance Petrowest's existing infrastructure business and provide access to a significant portion of the expansion activities associated with the Peace River oilsands development, the firm said in a release.
The five business acquisitions entail the payment of $50.4 million in cash, the issuance of about 4.3 million trust units of Petrowest and the assumption of $10.3 million of debt.
The businesses are Cutbank Trucking Ltd. Cutbank Transport Ltd., Jim Moffatt Construction Ltd., Quigley Contracting Ltd, Rick's Mechanical Services Ltd. and Tri-Dave Gravel Sales Ltd.
In its first-quarter financial report, the company reported a loss of $2.2 million on revenue totalling $32.9 million.