"We're at a very sensitive and critical stage," said Hearn yesterday, adding the competing Alaska Highway Pipeline could proceed if financial issues aren't resolved quickly.

Talks between oil companies, aboriginals and governments are at a "critical stage" and if progress isn't made soon the Mackenzie Valley Pipeline could sit on the shelf for years, says Imperial Oil CEO Tim Hearn.

"If this thing drags out and drags out, I believe Alaska will get built and we just might as well take a back seat for a long period of time. It's not in our best interest."

Imperial is the lead partner in the $7-billion Mackenzie Valley Pipeline, which would carry up to 1.9 billion cubic feet a day to southern markets from the Mackenzie Delta.

Negotiations are under way to establish a royalty system for the project.
"We're not asking for handouts, we're not asking for giveaways, that is not what we're working on," said Hearn.

"We're trying to find a framework because today, under current conditions, we don't have an economic project and we're working to make sure we can find one."
It's possible regulatory hearings -- which were originally slated for the summer -- could go ahead without access and benefits deals, but Hearn said he'd like to at least have agreements in principle in place.

Imperial has to give 60 days notice to regulators before starting proceedings, meaning it's unlikely they'll go ahead prior to year's end.

"But we need to get them going pretty soon because time is not on our side and I think we really need to come to some conclusions, some agreements that make sense for everybody," said Hearn.

IAN WILSON