Jack Danychuk
Northern News Services

Yellowknife (Sep 19/05) - Already a year behind schedule, the Mackenzie Gas Project hit another delay last Thursday as Imperial Oil postponed regulatory hearings that were to begin in early October.

Sandy Martin, Imperial's manager of regulatory affairs, said in a letter to the National Energy Board that the company doesn't have agreement on the main money issues: royalties, access and benefits with First Nations and governments.

"Additional time is warranted to determine if these outstanding matters can be resolved," Martin wrote.

"The proponents will advise the NEB and joint review panel in November of our willingness to proceed with a public hearing."

Premier Joe Handley wasn't surprised. He met recently with Tim Hearne, president of Imperial Canada, and described Hearne as "not pessimistic.

"He wants to make it happen on a timely basis, but he has to make it a good deal for his shareholders, too," the premier reported. He thinks the prospect of losing the project will be enough to bring an agreement.

"The pressure is on everyone," Handley said.

"A lot of people in the Territories have invested heavily in anticipation of the pipeline. That's all at risk. For us as a government, it's a pretty dismal future without the revenue and programs we need for our people right now."

The Northwest Territories is in the role of anxious observer at discussions on the key issues, pressing the federal government not to cut too deeply into its potential share of revenues from gas producers.

The devolution and resource revenue agenda is also stalled, and the premier will meet with Indian and Northern Affairs Minister Andy Scott at the end of the month.

"We've got to the point where we can't agree with what the federal government has put forward; we need to talk about how get around that."

Martin acknowledged in his letter that "progress has been made in all key areas" since last April when Imperial shut down engineering work on the project. He noted $500 million in federal funding for "socio-economic matters beyond the scope and responsibility of the project proponents."

Imperial has discussed its benefits and access offers with aboriginal land owner groups and is in on-going discussions with the territorial and federal governments on fiscal frameworks, Martin wrote.

Handley said First Nations are expected to make their own proposals to Imperial by month's end. If an agreement is struck by November, it could be January before the board and joint review panel open hearings, which are expected to last 16 months.

According to the original timetable for the $7 billion project, work on the pipeline was to start next year and be complete by 2009 delivering the first cubic metre of gas from the Mackenzie Delta to Alberta in 2010.

"It's stalled a lot of activity," Handley said, summing up the project's influence.

"We all have to be very aware that companies like Imperial can take their money anywhere. "At the same time, we don't want to give them such a sweetheart deal that we will regret it for years. That's the art of negotiating."