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Joint ventures key to pipeline development

Get ready for a different corporate culture

Stephan Burnett
Northern News Services

Yellowknife (Aug 18/03) - Imagine living in a small, isolated town in the North and suddenly 1,400 people are camped on your doorstep -- working a pipeline.

NNSL Photo

Ted Williams of the Khowutzun Development Corp., from Vancouver Island, spoke to attendees at a RWED workshop on joint ventures held at the Yellowknife Inn. - Stephan Burnett/NNSL photo


What would you do? Lock up your daughters and throw away the key? Or plan to make money off catering, barber shops, confectionary items, air transportation and other services required by the camp?

Moderation and finding that fine middle ground is the key to successful joint-venture relationships expected through the development of the Mackenzie Valley Pipeline, says Dennis Nelner, regional petroleum advisor for RWED in Ft. Simpson.

He says he would like to see co-operation among the Deh Cho communities "but it's not in place yet," he cautions.

Nelner speaks not only of a consortium of joint-venture companies working in unison throughout the Deh Cho, but also of hopes for pan-northern corporate entities comprised of Deh Cho, Sahtu, Gwich'in and Inuvialuit.

Currently however, the Deh Cho are in the midst of land settlement negotiations and Nelner says negotiators are bargaining more for a land management agreement than a simple land sale.

"When you go into the Deh Cho region there's not a lot of services. Getting maps, even getting a haircut; there's a variety of services that are not there. If these companies come in, we can offer the services," he says.

A joint-venture workshop was held last week in Yellowknife, sponsored by the Pipeline Readiness Office (PRO) and Resources Wildlife and Economic Development (RWED) with participants from the Deh Cho First Nation and Sahtu First Nation in attendance.

Joint ventures is the name of the game for doing business in lands controlled by the Deh Cho, Sahtu, Gwich'in and Inuvialuit, says Nelner.

This applies not only to oil and gas but also to mining and forestry endeavors.

In the Deh Cho itself, there are 10 different communities which southern companies looking to do business in the North may have to deal with.

Nelner explains with government contracts there may be a tendency for the subcontractor to lengthen the contract in order to receive further monetary gain, but with the gas industry, that's not the case.

The entire idea of doing business along the Mackenzie Valley is a work in progress.

"Tying culture with a corporation may seem like a paradigm.

"Finding commonality is difficult but it's slowly moving forward," says Nelner.

At the same time, there is room for optimism.

"I see it snowballing. Once we've created some working relationships and ironed out some bugs, over the next few years we'll be able to offer a solid product and compete with the southern companies."

Been there, done that

The ideal presenter for aboriginal companies looking to do joint venture work in the hydrocarbon field would be someone who has been there before; that's exactly who Ted Williams is. He was a keynote presenter at last week's workshop.

Williams, a business development officer with the Khowutzun Development Corporation owned by the Cowichan tribe on Vancouver Island, experienced a similar pipeline development project there.

"What initiated our start was West Coast Energy needed to construct their pipeline through our reserve lands," says Williams, who is a member of the Cowichan tribe.

West Coast met with the Vancouver Island chiefs and the various First Nation communities and asked about constructing a pipeline through their lands and there was a resounding 'No,' says Williams.

That resounding 'no' came from everyone with the exception of Chief Dennis Alphonse of the Cowichan. As a result of Alphonse's forward-looking response, the Khowautzun Development Corporation, which is owned by the Cowichan tribe, has banked $51 million since its inception in 1991.

Alphonse spoke to Art Williams, CEO of West Coast Energy and he decided to negotiate an opportunity to employ band members as a trade off for letting them put the pipeline through the reserve, says Williams.

The Cowichan formed a joint venture with the Northern Pipeline Company, based out of Arizona, to engage themselves with the pipeline project and on the fifth year of their partnership, exercised their option to buy out the joint venture -- for $1.

Williams says there are two ways for the aboriginal groups to make money off the building of the Mackenzie Valley Pipeline.

First, Williams refers to lease revenue and secondly, he speaks of on-site joint venture agreements.

"Lease revenue is easy, however I'd want to be constructing that pipeline.

"I'd get a hold of it and enter into a management agreement, bring in experience and start training band members.

"Secondly, I'd develop on-site joint venture agreements and the moment a First Nations person was skilled, the non-native person would be working themselves out of a job."