Kakisa (July 06/01) - Don't sign the proposed Mackenzie Valley pipeline agreement, Deh Cho First Nations' chief negotiator Chris Reid advised chiefs and elders last week.

Alleging the deal lacks guarantees and could result in "zero ownership" for First Nations, Reid was critical of the Aboriginal Pipeline Group's memorandum of understanding (MOU). At best, it would only net $1 million per year for the entire Deh Cho region after taxes, despite the fact that an estimated total of $100 billion in gas from the Beaufort Delta would be flowing south, he said.

"To me it looks like a great deal for industry ... it looks like a bad deal for the Deh Cho," he told the delegates at last week's Deh Cho Assembly.

Paul Precht, an energy economist from Edmonton hired for an independent opinion, agreed with Reid.

"No, it doesn't pass the test, but I think with work in some areas ... it can become acceptable," Precht said, adding that the agreement would be exclusive, forbidding discussions with other producer groups. As well, he said the MOU doesn't apply to Alaskan gas, which could one day flow through a Mackenzie Valley pipeline.

Reid contended that First Nations would only realize one-third ownership if they met a number of complicated conditions, which would include producing one-third volume of the gas in the pipeline. In addition, he said the MOU should include provisions granting First Nations a role in environmental assessment.

Reid said it's essential for the Deh Cho to first sign an Interim Resource Development Agreement with the federal government to guarantee a fair share of resource royalties and to have input in setting the royalty rate. Impact benefits agreements also have to be clearly defined with Canada, setting out job targets, training, profit sharing, contract opportunities, etc., he added. However, such an agreement is thought to be at least a year away. Signing a pipeline deal before then would lessen the DCFN's leverage in negotiations, according to Reid.

Deal defenders

Doug Cardinal and Dennis Nelner, APG representatives for the Deh Cho, defended the MOU and said its shortcomings could be addressed. Nelner, who noted that the MOU would not be legally binding at this stage, said some risk must be assumed by First Nations if they want any equity. One hundred per cent ownership, as proposed by Arctic Resources Ltd., is not realistic, he argued.

"With an all or nothing scenario, nine times out of 10 you get nothing. We saw that with the Norman Wells pipeline," said Nelner.

After failing to reach a decision on the Mackenzie Valley pipeline deal after two days of debate, Deh Cho First Nations leaders agreed to meet again in August to try to set a course of action.

Randy Ottenbreit, representing Imperial Oil and speaking on behalf of the four Mackenzie Valley producer groups, told the delegates that executives from the oil and gas companies would be willing to meet with First Nations leaders in their respective communities over the summer. He reiterated that aboriginal support for the pipeline is essential.

Ottenbreit added that there is no specific deadline for a decision, yet other developments such as an Alaska/Yukon pipeline could affect the Mackenzie Valley pipeline, he said.