Bob Reid explains why the APG is a great deal for future generations.
Just over 20 years ago, Interprovincial Pipe Lines (now Enbridge) planned to construct a pipeline from Norman Well, NWT to Zama, Alberta.
Interprovincial offered aboriginal communities along the route a 10 percent stake in the pipeline, but aboriginal leaders of the day felt that wasn't enough and held out for more. Interprovincial refused and the pipeline went ahead without any aboriginal ownership. Aboriginal companies were awarded some contracts during construction, but there were no long-term benefits for the aboriginal communities. Today, estimated earnings from the ownership refused by those aboriginal leaders would have amounted to nearly $30-million.
History will not repeat itself with the proposed Mackenzie Valley pipeline, due to the foresight of today's aboriginal leaders. The Aboriginal Pipeline Group has fought for and won the right to secure a one-third interest in the Mackenzie Gas Project - an exceptional deal for Mackenzie Valley aboriginal groups. Ownership means APG can sit at the board table of the Mackenzie Gas Project and can directly influence the pipeline's development. And from the first day that natural gas flows through the pipeline, the APG will deliver significant dividends to its aboriginal stakeholders - dividends that will continue for many years to come.
The idea for APG started with the January 2000 aboriginal leaders meeting, called by Chief Harry Deneron in Fort Liard, and it was formally established in Fort Simpson in June 2000. Its mandate was to maximize the long-term financial returns to aboriginal people through ownership in the pipeline. By June of 2001, APG negotiated a memorandum of understanding with the Mackenzie Delta Producers Group that provided for a one-third interest in the Mackenzie Valley pipeline. In June of 2003, APG negotiated an enhanced deal that brought funding from TransCanada Pipelines, the Delta Producers, and the federal and territorial governments.
We are now focussing on arranging the long-term financing needed to support our ownership position, loans that will be repaid from our share of revenue from the pipeline. APG ownership and dividends will increase as more gas flows through the pipeline. At the beginning, when the amount of gas going through the pipeline is estimated to be at least one billion cubic feet per day, APG can pay annual dividends of about $12.5-million per year. As the amount of gas going through increased to 1.5 billion cubic feet per day, dividends increase to more than $21-million per year. Once the loans are repaid, dividends could be as much as $100-million per year.
These very significant dividends will be distributed according to pipeline distance through each aboriginal region to those groups that have formally joined the APG, currently the Gwich'in, the Inuvialuit and the Sahtu. We have an open invitation to the Dehcho, but they have indicated that their land claim and self-government initiative - the Dehcho Process - remains their priority. I am optimistic that they will recognize the significant benefits available to them - based on the length of pipeline through Dehcho lands, they could earn more than one-third of the total annual dividends.
Benefits of long-term ownership through the APG are in addition to other benefits, such as land access and benefits agreements, arising from the pipeline. The Mackenzie Gas Project must negotiate these agreements separately with each landowner along the pipeline route before it can construct or operate the pipeline. On aboriginal lands, the land claim settlements, where applicable, establish guidelines for land access fees and permits. APG is not involved in these negotiations but we have encouraged both the federal and territorial governments to provide consistent funding assistance to aboriginal groups to ensure that these negotiations take place on a level playing field. The APG supports the timely and realistic successful negotiation of these agreements.
This is a chance to change the way things have been done in the North. Aboriginal groups no longer have to stand by and watch resource developments take place. Through APG, they can play a meaningful role in making it happen and can share in the long-term dividends - an exceptional deal for future generations.
About the Author: Bob Reid is the President of the Aboriginal Pipeline Group. He is best known for his 33 year career at TransCanada PipeLines, where he served as President, Energy Transmission, and as Senior Vice President, Northern Development, responsible for implementing a plan to access frontier supplies of natural gas.
Reid holds a Bachelor of Science degree in Electrical Engineering from the University of Saskatchewan, and a Master of Applied Science degree in Management Science from the University of Waterloo.
He has been a keynote speaker at numerous industry conferences and seminars.
