Jim Stott
Special Correspondent-Calgary
CALGARY, Feb. 24 -- A group representing Northwest Canadian aboriginal interests in a proposed Mackenzie Delta natural gas pipeline says it has struck a financial deal that will allow it to participate in the $4 billion (Can.) project.
The Aboriginal Pipeline Group (APG), based in Inuvik, NWT, said it had reached a tentative deal with industry interests for $70 million to cover APG's share of preliminary design work for the line and up to $300 million in equity if the line is built. APG eventually would have a one-third interest in the project under an agreement signed 16 months ago with the Delta producer group that is studying feasibility of a line. The group is headed by Imperial Oil Ltd. and includes Shell Canada Ltd., ConocoPhillips and ExxonMobil Corp.
Native groups' stance
APG Chairman Fred Carmichael said a formal announcement of a deal is 3-4 weeks away, after legal work is completed. He said the deal also will require approval from the producer group that owns 5.8 tcf of gas reserves in the Mackenzie Delta.
Carmichael refused to confirm reports that the deal is with Calgary-based TransCanada PipeLines Ltd., which would earn the right to build the 810 mile line from the delta to southern Canada. The line would move 1.2 bcfd and could be expanded to carry 1.9 bcfd.
Frank T'seleie, of Fort Good Hope, a member of the APG executive committee but not the negotiating team, said the deal is with TransCanada and it would obtain the right to build the line. Carmichael would not confirm that and said the deal is covered by a confidentiality agreement between the parties.
TransCanada had no comment on the reports. The company has expressed interest in participating in the pipeline project.
Enbridge Inc., another major pipeline operator, said it is continuing discussions with producers but does not have information on any deal involving TransCanada. A spokesman said Enbridge had no details on any deal and will await any announcement.
Carmichael said that APG will not give up any of its ownership interests in the pipeline and that there are back-in clauses in the deal that he cannot discuss at this point.
Major step forward
APG initially requested assistance from Ottawa in funding its share of the project, but the federal government declined to become involved.
Work has continued on the project, but an agreement to provide for aboriginal financing would be a major step forward.
A pipeline applciation could be filed later this year with the National Energy Board, initiating a regulatory process that could take up to 2 years. If approved, construction would take 3-4 years. The project would not be completed until 2008 or 2009.
A financing deal for APG would also improve prospects for a Mackenzie Valley pipeline in comparison with the larger Alaska Highway Pipeline project, which North Slope gas owners say is not economic. That project has so far failed to win financial support from the US Congress, although legislation to that effect has surfaced in proposed omnibus energy legislation.