FORT GOOD HOPE, Northwest Territory - The Aboriginal Pipeline Group and energy industry giant TransCanada Pipelines Ltd. signed a tentative agreement on Feb. 19 that secured $370 million in immediate financing for the Native-owned component of the $3 billion Mackenzie Valley natural gas pipeline project. The remaining balance of APG's one-third share will come from equity loans once the project has been built.
"We have put together a tentative agreement for the financing of the pipe, for APG's one-third. We still have to put the legal papers together," APG chairman Fred Carmichael said on Feb. 24 when the deal was actually announced to the public. "We have been successful in raising that with no risk to Aboriginal people.
"It's a good deal, a good deal for the people, so we're happy."
Carmichael said a formal announcement of a completed agreement will take three to four weeks to complete.
In return for the start-up capital, TransCanada will be granted the contract to construct the pipeline.
The project has been stalled for decades because of Ottawa's resistance to help APG fund their portion of the project and outstanding land claims. Minister of Indian Affairs and Northern Development Robert Nault, said it was not in Canada's best interest to extend loan guarantees to APG, but the Chr?tien administration had not ruled out the possibility if the financing agreement with TransCanada had fallen through.
Nault said he plans to express Canada's concern that a proposed floor price guaranteed by Washington to energy companies for oil and gas development in Alaska, including a resurrected plans to develop the Alaska National Wildlife Refuge, will distort North American oil and gas prices.
"My understanding is it's alive and well and will be reactivated - if it's not already," said Nault of the American energy bill that also called for the construction of a pipeline through Alberta to markets in the U.S. But, it is not immediately clear if the Mackenzie Valley project is tied to the American project.
The Mackenzie Valley 1,350-kilometer pipeline would be the first natural gas pipeline from the Arctic. The pipeline could carry an estimated 64 trillion cubic feet of natural gas through Alberta to the lower 48 states.
The project will take place in three phases. The first is to prepare the natural gas deposits near Inuvik for production. The project will also have to develop a harvesting system that links the deposits with the main pipeline, the final component of the pipeline.
APG was founded in 2000, following meetings in Fort Liard and Fort Simpson with Aboriginal leaders from all regions of the Northwest Territories. The company represents the interests of Aboriginal people in the Territories by maximizing the ownership and benefits in a Mackenzie Valley natural gas pipeline, including profit funding, public service programs and the projected creation of thousands of high-paying jobs.
These APG goals are included in a 2000 Memorandum of Understanding between the company and the Mackenzie Valley Producers Group. They are protected by clauses that protect Native ownership of the main gas pipeline also referred to as a "truck line." The companies that are partners in MVPG are Imperial Oil Resources Ventures Ltd., Conoco Canada Ltd., and Exxon Mobile Canada Properties.
(All dollar figures mentioned are in Canadian funds.)