Richard Gleeson
Northern News Services

Yellowknife (July 23/01) - If it looks too good to be true that's because it is, said Finance Minister Joe Handley of the 100 per cent pipeline ownership offer gaining support among aboriginal groups.

Finance Minister Joe Handley: "Who's going to guarantee this?" - NNSL photo

"The (Mackenzie Delta) producers are just shaking their heads and saying, 'No, we can't do this,'" said Handley, referring to a proposal from Houston-based Arctic Resource Corporation that is gaining momentum in the valley.

Handley and premier Stephen Kakfwi were at a series of meetings with gas and pipeline companies in Calgary last week.

"The question they all had was, 'Who's going to guarantee this?'"

ARC spokesperson Harvie Andre said the guarantee is the estimated 35 trillion cubic feet of known gas reserves on Alaska's North Slope.

Alaskan gas is the focus of the ARC proposal, which would ship Alaskan gas to the Beaufort-Delta via an offshore pipeline to the Beaufort Delta. There Canadian gas would be picked up. The U.S. and Canadian gas would be shipped through a Mackenzie Valley pipeline to southern markets.

"We can finance this project in exactly the same way as an infrastructure project -- 100 per cent debt secured by the revenues from the natural gas being transported," Andre said.

That kind of security would, at current rates, require interest payments in the order of 7.75 per cent for the $6.2 billion project, Andre said.

The aboriginal pipeline group, headed up by former NWT premier Nellie Cournoyea, has tentatively agreed to a proposal for a stand-alone Mackenzie Valley pipeline that would give aboriginal groups along the route a 30 per cent ownership stake.

Producers indicated last week they may be submitting notice of their intent to apply for environmental permits as soon as September, Handley said. The government is not considering any other proposals at this time, he added.

"We're following the resolution that was passed a year and a half ago at Fort Liard. We said we would back one group that would negotiate a deal on behalf of aboriginal producers," said the finance minister.

Andre said under the ARC proposal payments to Alaskan and NWT aboriginal groups along the route would come in the form of a 'sponsorship fee' and total roughly $50-100 million per year.

No route or ownership arrangement is practical without the co-operation of producers and the owners of the gas. Andre said he has received no such assurances from either Alaskan or Beaufort Delta producers.

"Everybody's studying it at this point in time," he said.

Through their lawyers, the Tulita Land Corporation, Fort Norman Land Corporation and Ernie McDonald Land Corporation recently gave notice that their permission is required to gain access to Sahtu lands for surveying or pipeline construction work.