A major new natural gas pipeline in northern Canada may become a reality by 2008 if all goes according to plan. What’s most unusual about the Mackenzie Gas Project is not just its size, but the fact that it will be the result of a joint business venture between several large corporations and the Aboriginal Pipeline Group, formed by the leaders of thirty First Nation communities in the Northwest Territories (NWT).
The Aboriginal Pipeline Group (APG) would have a one-third share in the project to build a natural gas pipeline across the NWT, following the Mackenzie River Valley and connecting with another pipeline system in northwestern Alberta. Imperial Oil, ExxonMobil Canada, Conoco Canada, and Shell Canada would also be involved, with Imperial acting as the chief operator of the pipeline. Projected output from the three main fields that would supply the pipeline is between 800 million and 1 billion cubic feet of natural gas per day.
In order for the project to go ahead, the APG must raise $1 billion (Canadian). Fred Carmichael, chair of the APG, has stated that only about $300 million of that must be in cash, as the rest could be financed from banks. It is not unusual for such large projects to be debt-financed. “Seventy percent is quite reasonable,” Carmichael has said. While observers initially expected the APG to be financed by the Canadian federal government, after a year of negotiations, the APG has said it is looking at the private sector. It is even conceivable that one or several of the existing partners in the Mackenzie Gas Project would finance the APG, as the support and involvement of indigenous people is seen as politically critical to the success of the project.
The almost unanimous support of the First Nation communities involved is remarkable, especially in light of the history of the proposal. In the 1970’s, the government launched a commission to consult with First Nation peoples in the area about a proposed Mackenzie Valley pipeline. It was headed by Thomas Berger, a judge from British Columbia appointed by the Canadian government. While some believe the Berger Inquiry was initially envisioned as a brief “rubber-stamp” operation, the three-year project is considered a turning point for government-First Nation relations. Berger traveled extensively, listening to the concerns of people across the NWT and the northern Yukon. Believing a rare opportunity to be heard presented itself, native Canadians mobilized to fight the proposed Mackenzie pipeline, forming new political organizations and inter-community ties. Berger submitted an influential report in May 1977 recommending at least a 10-year moratorium against pipeline development, a result praised by aboriginal leaders. Few, however, believed such a moratorium would actually be put into effect.
The Berger report and economic doubts did put the pipeline proposal to rest, only to be revived more than 20 years later. Now, in an interesting twist, many of the same leaders who were most vocal in the fight against the 1970’s proposal are in favor of the new project, including some members of the APG Executive Committee. The crucial difference: with a one-third share in the project, they believe the pipeline project will reflect native interests and environmental concerns, and that proper planning and community readiness will offset the potential negative social and cultural effects of such a dramatic economic stimulus. The APG believes it can create a “new model for Aboriginal participation in the developing economy” through training and education for work on the pipeline and by focusing on identifying long-term business opportunities indirectly related to the pipeline (transportation companies, for example). If all goes well, the APG argues, the pipeline will provide a long-term source of income for Aboriginal people in the area.
Carmichael expects to have “good news” regarding financing by the end of January 2003. However, whether the “new model” of development will have a chance to be tested is largely dependent on the strength of the U.S. economy, since America would be the pipeline’s chief customer. Though much work has been done on the pipeline project, no irreversible commitment has yet been made. There are reasons for optimism for the APG: natural gas prices are now at a two-year high; American concerns about reliance on Middle Eastern energy are fueling demand for Canadian gas; and the industry is seeking to develop more prospects to maintain supply. On the other hand, the natural gas market is extremely volatile, and the near future of the American economy is far from clear.
