CBC: Imperial Oil is just weeks away from an important deadline. Next month, Imperial and its partners will decide whether the $7 billion Mackenzie gas project is ready for public hearings. Two issues are front and centre: access agreements with aboriginal organizations along the pipeline route, and what kinds of concessions Ottawa is prepared to give Imperial Oil to build the pipeline. This morning we're joined by three people who are following this debate closely. Doug Matthews is the former head of the territorial government's minerals, oil and gas division and he's now an energy consultant who joins us on the line this morning from Tuktoyaktuk. Good morning, Doug.

MATTHEWS: Good morning.

CBC: And Chief Kenya Norwegian of the Liidlii Kue First Nation heads negotiations for Deh Cho communities along the pipeline corridor. Good morning, Chief Norwegian.

NORWEGIAN: Good morning.

CBC: And Kevin O'Reilly is a member of Alternatives North, a social justice group based here in Yellowknife. Welcome, Kevin.

O'REILLY: Hi, Randy.
CBC: Now let's start with you, Chief Kenya Norwegian. First of all, how far apart is the Dehcho and Imperial on access agreements?

NORWEGIAN: I guess we're miles apart right now because we never really had any serious negotiations with Imperial.

CBC: Alright. I wonder if you can clarify for us, Chief, where you stand on the question of aboriginal organizations taxing the pipeline.

NORWEGIAN: After we've done some background checking and speaking with people who are very familiar with First Nations being able to tax on traditional lands, I think we're going to be able to have some solid backup for what we're trying to do. It's in the Constitution, it's in the treaty rights to be able to access benefits in this way.

CBC: Alright. Kevin O'Reilly, do you support the idea of aboriginal organizations collecting a tax on the pipeline?

O'REILLY: Well certainly there's quite a bit of tax room there in terms of the ability to capture more revenues, benefits from this project. Whether it's called a tax or an access agreement, an annual fee, doesn't really make much difference to me personally, but I understand the principles involved. You know, with the diamond mines before there were concluded land claims agreements, there are in place now annual payments from the diamond mines under the impact and benefit agreements, not one-time payments. So the idea of annual payments, some sort of fees, whether we call it a tax or not, it makes complete sense to me.

CBC: Well what if aboriginal taxation cuts into the revenue the territorial government stands to earn?

O'REILLY: Well the territorial government just doesn't seem to be very anxious to actually raise any more revenues from non-renewable resource development. They have the authority and they just refuse to exercise it. Our diamonds and oil and gas are being given away by DIAND and the territorial government is not stepping up to the plate.

CBC: Doug Matthews, when Imperial Oil says they want fiscal certainty with the federal government, what in fact do they mean?

MATTHEWS: Originally when they came to governments on that issue, Randy, what they were talking about was that they weren't looking for any specific benefit. What they wanted was just some assurances that the fiscal regime in place when the project began would remain in place for the duration of the project, and that's a fairly reasonable request. I understand now, however, that they may in fact be asking for changes to that fiscal regime, and that's a whole different request.
CBC: We understand they're asking for $2 billion. Is that unreasonable or unusual, from your point of view?

MATTHEWS: The problem that I have with it is not whether it's reasonable or unreasonable. As you well know, the American government gave various incentives for the Alaskan project. The problem I'm having with it primarily is that the American process was done in public. There were strong debates over the nature of the incentives whether they should be given, there were…(inaudible)…pieces, there were congressional committees. In fact, the GNWT submitted a report to one of the congressional committees. The problem we have here is these negotiations with Imperial that are taking place are being done totally in the dark. The only information we have is coming to us from the Sierra Club.

CBC: Well when the president of Imperial Oil says the project is uneconomic, do you believe him, Doug?

MATTHEWS: I have a bit of a problem with that, because really what he's saying is that they're using $2.50, an MCF gas, and therefore concluding that it's uneconomic. But the problem is that gas from 1980 to about 2003 was averaging around $3.11. Even at the time Imperial started serious work on this project, gas was trading for about $2.40. I think maybe the culprit here might not be the price of gas, but rather the strength of the Canadian dollar. You see in 2000, $2.40 American would have bought you $3.43 Canadian, but today $2.40 American would only buy you $2.82 Canadian.

CBC: Kenya Norwegian, how much financial support do you feel that Ottawa should be giving this project in order to get it off the ground?

NORWEGIAN: We're not really…It's not really our say what Ottawa does. But if it helps our case, because we're saying that we don't care where this money comes from if it comes part from Imperial part from Ottawa, where it comes from, as long as there are First Nations people along the valley are being paid an annual fee.

CBC: Kevin, Alternatives North, I understand, has been talking about public ownership of the pipeline. How would that work?

O'REILLY: Well if Imperial Oil is indeed asking for $2 billion in some sort of repayable loans or loan guarantees, and the federal government, the taxpayers of Canada, are being asked to share part of that risk, why shouldn't we share some of the benefits through public ownership of the project? That's, I think, a reasonable way to approach this. If they're asking for some sort of concessions where the risk is shared, let's share the benefits and the profits as well.

CBC: So, many things to sort out here, Doug Matthews. How much time does Imperial Oil have to get its problems sorted out before the Alaska pipeline becomes more of a threat?

MATTHEWS: I think that's really the problem, Randy. People have lost perhaps focusing on the Mackenzie project. The U.S. energy bill said, among other things -- one of the bills that gave some of the incentives to the Alaska project -- that if no application were filed within 18 months of the passage of that legislation, then the secretary of energy was charged with looking at alternative means of moving that gas. Well that 18 months runs out on April 6th. Then the other thing that energy bill contained was loan guarantees which were going to be available to the project up until two years after the issuance of a certificate of public convenience and necessity, which would take you through to around about 2009, 2010. But last Friday a bill went to the House of Representatives that looks to change that two-year time frame, saying that the loan guarantees would only be available up until two years after the passage of this most recent legislation, and that puts you round about maybe '07, '08. So the Americans are really putting the pressure on that Alaskan project to move ahead. That's what would concern me for the Mackenzie project. If that Alaskan one goes, the Mackenzie gas is probably toast until somebody comes up with the old Dempster lateral idea.

CBC: Well given these sets of circumstances, problems, some obstacles, Kenya Norwegian, how optimistic are you that these problems will be resolved by next month?

NORWEGIAN: I'm pretty optimistic. I think we all know that the need for the gas is there and the government, we all know, is willing to do what it can to push this pipeline through. But we just hope that the First Nations people are listened to and everybody realizes our rights to collect some revenue off this, because we are giving up our traditional lands.

CBC: Kevin, as we mentioned, Imperial Oil has 'til some time in November to state whether they're ready for public hearings or not. Do you think that they'll resolve these problems?

O'REILLY: Well I think there's a lot of work that needs to be done. There should have been a lot more work done up front in terms of looking at alternatives. The kind of pipeline that Imperial is interested in building would simply drain the Delta in about 30 years. We should be looking at a smaller diameter pipeline. If we need to have a pipeline, look at something smaller so we can stretch out the benefits, allow communities to adapt better over a longer period of time and retain more of the benefits. So a lot more work needs to be done and if Imperial doesn't build it, perhaps someone else may step up to the plate and look into it.

CBC: A final word to you, Doug Matthews, how optimistic are you that these problems will be resolved by next month?
MATTHEWS: Not as optimistic as I was even six months ago.

CBC: Alright. With that, I'd like to thank all of you for joining us and sharing your points of view this morning. Thank you very much for joining us.

MATTHEWS: Good bye.

CBC: Doug Matthews is a former territorial government employee who is now working as a consulting with the community of Tuktoyaktuk. Kevin O'Reilly is a member of Alternatives North. Kenya Norwegian is chief of the Liidlii Kue First Nation and heads up the negotiations team for the Deh Cho communities along the pipeline route. So what do you think? Call our talkback line with your thoughts on how badly you want to see the Mackenzie Valley pipeline and its hearings to begin soon. The number is 873-4928. You can call that number collect with your thoughts on this issue. 873-4928.

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