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Pipeline details released

TransCanada still expected to bankroll APG

Terry Halifax
Northern News Services

Dettah (May 09/03) - The details of the partnership plans to build a proposed Mackenzie Valley natural gas pipeline were released last week along with the official announcement that TransCanada Pipelines of Calgary is the anticipated financing partner.

NNSL Photo

Proposed ownership percentage

Aboriginal Pipeline Group 33.3
Imperial Oil 34.4
ConocoPhillips Canada 15.7
Shell Canada 11.4
ExxonMobil Canada 5.2

The APG Structure

General Partners:

Deh Cho
Inuvialuit
Sahtu
Gwich'in

Limited Partners:

South Slave Metis
Deh Cho
Inuvialuit
Sahtu
Gwich'in
Dogrib
Akaitcho
North Slave Metis
Salt River


At a meeting of the Dene Assembly last week in Dettah, Aboriginal Pipeline Group chair Fred Carmichael confirmed what was rumoured for many months.

"We need to close the deal with the producers; with the third party," Carmichael said. "I might as well tell you -- you know it anyway -- that third party is TransCanada."

APG spokesperson Megan Holsapple said Tuesday that the likely financing arrangement with TransCanada is only for the project definition phase of the pipeline.

"It's not for the full amount," Holsapple said. "That's still being negotiated."

In a report released by the APG, they say they will assume no financial risk in the $70 to $80 million loan if the pipeline does not go through, but will have secured one-third participation and voting rights in the project. The total requirement for the APG portion of pipeline construction is estimated at $1 billion.

Carmichael said they are working on "enhancing" the memorandum of understanding (MOU) that they signed in Ndilo in October 2001.

"We are making it better for the people," he said.

The APG report detailed the role of the APG as securing ownership for aboriginal people to seek a long-term financial return and to monitor and participate in the construction of the line.

What the APG won't do is negotiate land access agreements or benefits for individual groups.

Through the financing arrangement, TransCanada gets the option to obtain a "small percentage" of the producers group share of the pipeline, right to obtain additional interest through preferential rights of first refusal, a preferential option on expansions in the pipeline.

Perhaps most important to TransCanada, they secure the right to connect the pipeline to their Southern transmission network.

In recent hearings before the National Energy Board, TransCanada warned that its transmission system could be running at 50 per cent of its current capacity of 7.3 billion cubic feet per day as early as 2009.

Gas from the Beaufort Delta and Mackenzie Valley could boost TransCanada's volumes by as much as 1.9 billion cubic feet per day.

TransCanada recently secured shareholder approval to form a holding company known as TransCanada Corp., that would remain a separate entity, allowing partnership in a Northern pipeline.