The threat stems from a controversial bid on a parcel of land for oil exploration in the central Mackenzie Valley, according to corporation lawyer Rick Hardy.

The corporation was offered $2.5 million toward training and employing people in its region by Canadian 88 Energy Corp., one of the unsuccessful bidders. But the offer came too late, according to the federal government.

Hardy says it was the federal government's duty to get the best deal possible for the people of the Sahtu land claim settlement area. And it didn't happen, he adds.

The rights to parcel 11, a 134,000-hectare block of land south of Tulita were won by A.E.C. West.

"Our position is the tendering procedure was not finished until the exploration benefits plan was submitted, so on that basis we're saying the tender is invalid," Hardy said.

Calgary-based Canadian 88 offered five per cent on any net profits of petroleum and natural gas and all related substances produced from exploration licences within the Tulita district to the Sahtu group if the deal went ahead.

But Hiram Beaubier, director general of natural resources and environment for the Department of Indian and Northern Affairs, said Canadian 88 submitted its bid on two parcels of land in the Mackenzie Valley too late to be considered.

The closing date for bids was May 1 at noon. Canadian 88, said Beaubier, faxed in its bid May 2. In addition, the company combined two parcels of land together as one bid, instead of submitting two separate bids.

But Canadian 88 said the real issue is that the federal government has an obligation to get the "best deal globally."

President of Canadian 88 Energy Corp., Greg Noval, said he finds it shocking.

"We didn't see May 1 as fixed in stone. We felt there should be one week to 10 days' consultation to allow industry to cut deals," Noval said in an interview from his Alberta-based office.

"We don't feel the permits issued to date have been issued properly and we feel there's been lip-service consultation (by the federal government)," says Noval. He believes hasty decisions were made at the federal level. "I think the people up there got a raw deal."

Canadian 88 bid $7.1 million on parcel 11. It later submitted a "skid" bid, consolidating two parcels of land in its bid for a total of $8.5 million plus a benefits deal. Noval says skid bids are common practice in the Alberta area. However, the winning bid by A.E.C. West was for $8.5 million to explore on 133,518 hectares of land.

The Sahtu land claim agreement supersedes the Canadian Petroleum Resources Act, which determined how the tendering procedure was conducted, Noval says.

Gordon Yakeleya, chief of the Tulita Dene Band and president of Tulita District Land Corp. Ltd. is disappointed. "We're unhappy we never had a talk with the minister (Ron Irwin)," he said. He cited a high unemployment rate in the Sahtu region and noted none of the other bids had the training of local people component in their bids. Yakeleya said there were no discussions between himself and Canadian 88 until after May 1.

Canadian 88 is listed on the Toronto Stock exchange. It's a $570 million company, with operations in northern Alberta, northern B.C. and Saskatchewan. It also owns 200,000 acres south of Norman Wells where it's done seismic work.