Lynn Lau
Northern News Services

Inuvik (May 20/02) -The group proposing an "Over the Top" pipeline route visited Mackenzie Delta communities last week to pitch their project to the Gwich'in communities.

Promising rich returns, 100-per-cent aboriginal ownership, and all-weather roads linking the communities, ArctiGas Resources Corp. received a warm audience with Gwich'in band councils in Inuvik, Aklavik, Fort McPherson and Tsiigehtchic.

ArctiGas is proposing a 2,710-kilometre natural gas pipeline that would be fully owned by aboriginal groups. Dubbed the "Over the Top" route, it would connect Prudoe Bay to Edmonton via the Beaufort Sea and Mackenzie Valley.

Managing director Bruce Hall said the project would provide the best deal for aboriginal groups, and the best rates for producers when compared to the other pipeline proposals -- an Alaskan line and the Mackenzie-only line, backed by four gas producers and a conglomerate of NWT aboriginal groups called the Mackenzie Valley Aboriginal Pipeline Corp.

The ArctiGas proposal would involve aboriginal groups taking a loan for the full project cost -- US $7.8 billion (CDN $12.1 billion). Even though aboriginal groups would be the owners, they would not be shouldering any economic risk, because the loan would be guaranteed by the sale of bonds, and the tariffs charged to gas producers, Hall said.

ArctiGas would remain on as the pipeline manager and the aboriginal owners would reap revenues of an estimated US $70 million (CDN $109 million) per year, Hall said.

The plan has already won over the Nihtat Gwich'in Council in Inuvik which passed a motion in March to support it. "It seems like the one that is least risk," said Chief James Firth. "They've filed with the National Energy Board - we know what they're offering."

David Edwards with the Ehdiitat Renewable Resource Council in Aklavik said he personally believes the proposal to be the best for the Gwich'in. "I'm really interested in this," he said after the presentation Tuesday evening. "We're going to own this -- that's the way it should be anyway."

Even if ArctiGas can win the support of the aboriginal groups, the proposal still has two major problems -- Alaskan legislators passed a law in March banning the route, and so far, it has won no support from the natural gas producers.

Industry analysts say without producer support, the proposal is in trouble.

"Whatever gets determined is going to get determined by the producers," said William Lacey, research analyst with the Calgary investment bank FirstEnergy Capital Corp. "It comes back to these four words -- it is their gas."

Calgary analyst Ian Doig didn't mince words when asked about the project. "In my estimation they (ArctiGas) are a bunch of Old Testament merchants outside the temple gate waiting for their 10 per cent," said Doig, publisher of the industry newsletter Doig's Digest.

With 100-per-cent aboriginal ownership, ArctiGas would have no financial stake in ensuring the project is successful, he said. "They'll get their fat commission cheques for getting this proposal together and if things go bad, they'll be able to bail out."

ArctiGas says the project is simply running into criticism because its approach to financing is new and unique.

If the meeting in Aklavik was any indication, that idea is selling.

Asked if he thought the no-risk, all-benefit pipeline was too good to be true, band manager Knute Hansen said he didn't think so. "It was good information," Hansen said. "The people need more of that."