Yellowknife (Apr 29/05) - While an NWT cabinet minister was in Washington this week pushing the benefits of the Mackenzie Valley pipeline, Imperial Oil Ltd. announced yesterday it will halt non-regulatory work on the $7-billion project.

In a press conference yesterday, the company said aboriginal groups are asking for too much money, and the regulatory process is unfair.

"There are expectations and demands which run far beyond the scope of what we are prepared to address," said Imperial Oil CEO Mike Yeager.

According to Yeager, the pipeline partners have spent in excess of $350 million so far.

Negotiations are in progress with the Inuvialuit, Gwich'in, Sahtu, and Dehcho First Nations.

"Those four groups have some legitimate demands on benefits and access, which is a normal part of business. How much and what types of things coming to us, that's where we need clarity," Yeager said.

With 1,200 information requests received so far from people and groups involved in the process, the company says many of the requests are beyond the normal scope of business.

Premier Joe Handley said Imperial Oil told him about the announcement last week.

"I think it's a wake-up for the federal and aboriginal governments," Handley said.

Aboriginal governments are using the pipeline as leverage for other agreements such as resource revenue sharing, Handley said.

"We have to be careful because there could be nothing left for everyone," the Premier said, adding the future of the pipeline is not necessarily in jeopardy.

The regulatory process will continue.

The Mackenzie Valley Pipeline partners - lead by Imperial Oil - also include Shell Canada, ConocoPhillips, Exxon Mobil, and the Aboriginal Pipeline Group.

Brendan Bell, Minister of Industry, Tourism and Investment, was in Washington, D.C., earlier this week to convince lawmakers there that NWT gas is something worth thinking about now rather than later.

Imperial Oil's announcement may have made that trip futile.

The Americans have a U.S. Senate bill that would offer an $18 billion subsidy for the Alaskan pipeline. Bell said if that plan goes ahead it could put the NWT's own ambitions to capitalize on a Mackenzie Valley pipeline in serious jeopardy.

Now Bell knows there are greater dangers that will kill the Mackenzie pipeline than American subsidies elsewhere: Imperial's work stoppage.

"The message they've been hearing (in Washington) is that Mackenzie gas will be largely taken up by the oil sands (in Alberta) so that won't have an impact on the American market," said Bell.

"That's a myth we've been working to dispel. Thankfully, that message is already starting to be turned around by industry associations down here," the minister said.

"They don't have to subsidize Alaskan gas. In the interim, we can provide Mackenzie gas," Bell said.

When asked if he thought the Americans were listening - his meetings included those with Alaskan Senator Lisa Murkowski and Senate Resources committee chair Larry Craig - Bell said it appeared so. But with Imperial's current stance, that position may prove tenuous.

-with files from Andrew Raven