SOMBA K'E/YELLOWKNIFE - The future of a $16-billion project to carry natural gas from the Beaufort Delta to southern markets may be more of a pipe dream following rumours Ottawa may not go forward with its investment.

Dennis Bevington, MP Western Arctic: Speculation of pipeline rejection, secrecy a problem Nellie Cournoyea: Has not been able to verify that pipeline funding was rejected by federal government Bob McLeod: Optimistic the federal government will support the Mackenzie Valley pipeline

A National Post article published Tuesday, which cites unnamed sources, states that federal Environment Minister Jim Prentice took "a major financial assistance package to a cabinet committee last week" which included a proposed federal contribution towards construction of the Mackenzie Valley Pipeline. The article states that the proposal was rejected due to the costly price tag.

Frederic Baril, spokesperson for Prentice, said the minister made it "quite clear" in the Post article that there "has been no decision made" on the funding, but he does not deny the allegation the funding package was rejected.

"Cabinet discussions are subject to absolute confidentiality and when the government has something to announce on the issue, we will announce it," Baril said. "Our discussions on the fiscal framework continue with TransCanada Pipelines, the Aboriginal Pipeline Group and the proponents of the anchor fields."

Pius Rolheiser, spokesperson for Imperial Oil on the Mackenzie gas project, said discussions with the federal government remain ongoing in an attempt to "nail down a fiscal framework."

"I certainly can't comment on a discussion that may or may not have taken place in Cabinet," Rolheiser said Tuesday. "From the proponents' perspective, we remain very much committed to the project and we're working diligently on a number of fronts."

In the legislature Tuesday, Premier Floyd Roland, fielding questions on the Joint Review Panel's anticipated report on the pipeline from Weledeh MLA Bob Bromley, said the GNWT is unaware of any rejection by the cabinet committee and the territorial government is looking into the Post's report.

Bob McLeod, Minister of Industry, Tourism and Investment, reiterated what Roland said.

"I'm still optimistic and as I said before, Arctic natural gas is still required," McLeod said during the session break on Tuesday. "When you look at the United States government they are committed to seeing the Alaskan pipeline going forward and have increased their support.

"They're showing they have the political will to see a pipeline go ahead and we're waiting for our government to show the same will."

Dennis Bevington, Western Arctic MP, said he tried to speak to Prentice Tuesday, but the minister declined to meet with him, adding the rejection is just speculation at this point, which he said is part of the problem.

"We don't know what the minister has offered up," Bevington said of the secrecy behind the negotiations to build the 1,220 km pipeline from the Beaufort Sea to Alberta. "I don't know if it's been accepted by industry. He wouldn't have gone to cabinet unless the industry accepted it."

Nellie Cournoyea, CEO and chair of the Inuvialuit Regional Corporation, said her attempts to verify information in the story have been futile.

"The federal government doesn't know what anybody is talking about. How can I be concerned? I called all the right people, nobody knows anything. We checked all over the place. We're are not getting any verification on the story,"

She didn't want to talk about where the project stands currently.

"I don't know. We're at the same place we were at. We are waiting for the panel review to come up. That's the best we can do. We hope it comes out in December like they promised."

Richard Nerysoo, Gwich'in Tribal Council president, said, "Are they (the federal government) interested in playing that long-term partnership role in developing Canada's North with aboriginal and Northern leadership? That's the question people have to ask.

"It's disappointing. There's all kinds of valid reasons why a pipeline should be built. It's a transportation system. The corridor should be a part of the national vision in the North. For the government not to take seriously the importance of that is a bit distressing. I'm concerned of the affect that will have on the project because despite everything else the government of Canada is key in any large project. It's really important that Canada takes a real key role in encouraging national projects, to improve the economic conditions in various regions and improve the economics of Canada as a whole."

In Fort Simpson, Lionel Nadia, the president of the Fort Simpson Chamber of Commerce, said he was unaware of the federal government's concerns over the cost of the pipeline.

The chamber would like to see the pipeline move forward, said Nadia. The project would be beneficial for the chamber, local businesses and the village, he said.

Nadia said he was unaware if local business owners still expect the pipeline to be built.

As of Tuesday, natural gas was fetching $4.50 per 1,000 cubic feet on the New York Mercantile Exchange, up from its seven-year low of below $2 reached earlier this year.

- with files from Mike W. Bryant, Roxanna Thompson and Andrew Rankin