Thorunn Howatt & Terry Halifax
Northern News Services

Yellowknife (May 13/02) - Americans may want to make rules to suit their own game, but in a pipeline race Canada won't let arctic natural gas be stranded, even if by a bigger opponent.

Premier Kakfwi: "We have to stand up and be tough." - NNSL file photo

After slapping huge tariffs on Canadian B.C. lumber, an American bill proposed that Alaska Highway pipeline users - large energy companies - would be subsidized if prices fall below $3.25 US per thousand cubic feet. It also proposes $10 billion US in project loan guarantees.

Canadian gas producers, along with Canada's Minister of Natural Resources Herb Dhaliwal, have opposed the American bill, saying it could derail any plans for Canadian pipeline routes and disrupt the natural gas market.

"They tend to forget that if they want the Alaska route, two-thirds of it is going to have to come through Canada," said Dhaliwal in the National Post. "So they should keep that in mind. At the end, it needs Canadian support."

Until now the federal government has taken no stand on a pipeline that would carry arctic gas southward.

There are two competing proposals, one Alaskan and one Canadian. The American line would follow the Alaska Highway southward and completely bypass Canadian gas reserves. That $17-billion project was deemed uneconomic, but the U.S. government wants to make guarantees and subsidies to help gas producers and lower the cost of a pipeline.

The $3-billion Canadian proposal sees a pipeline starting at the Mackenzie Delta carrying gas southward following the Mackenzie Valley. Dhaliwal said the Canadian government may have to look at "other measures" to ensure Canadian gas isn't stranded.

Premier Stephen Kakfwi said the U.S. complained and punished Canada for allegedly subsidizing softwood lumber and then turned around to do the same thing with steel and farm subsidies and are now trying the same with gas.

"I think we have a problem," said Kakfwi. "We have to stand up and be tough about it." Kakfwi returned recently from an oil and gas meeting in B.C. "I think they were looking for some leadership and we're trying to provide that."

U.S. Energy Secretary Spencer Abraham declared the administration will not support the subsidy. "This administration's been very clear in terms of tax provisions we support with respect to that subsidy," said Abraham. "The administration's position is a neutral one with respect to route preference. We believe the market should make that decision."