Derek Neary and Mike W. Bryant
Northern News Services

Fort Simpson (Oct 10/05) - The Deh Cho want up to $20 million a year from the Mackenzie Gas Project, but it's unclear whether the region has the authority to impose the fee.

Even without a settled land claim, aboriginal people have an inherent governmental power to apply property tax on their traditional lands, according to Keyna Norwegian. She is president of the Dehgah Alliance Society, which represents First Nations and Metis along the pipeline route in the Deh Cho. Forty per cent of the pipeline route passes through the Deh Cho region.

A one per cent tax on the $7-billion pipeline's capital costs in the Deh Cho, would amount to $17-20 million annually, said Norwegian. Campbell Morrison, press secretary to Indian and Northern Affairs Minister Andy Scott, had a different view of the proposed tax.

"In our opinion, in the absence of a self-government agreement, the only jurisdiction that could do it is the GNWT," Morrison said.

Pius Rolheiser, spokesperson for Imperial Oil, wouldn't weigh in on the matter. He said it is the federal government's jurisdiction.

It was widely reported in the media last week that Imperial Oil is seeking as much as $2 billion in taxation and royalty guarantees from the federal government on the pipeline. Rolheiser said he doesn't know where that number came from, and insisted that Imperial is not requesting a subsidy or a hand-out.

Morrison also rejected the rumoured $2 billion in concessions.

"We're not in the position to confirm that figure. We don't know what Imperial is asking for," he said.

However, Rolheiser acknowledged that Imperial has been in discussions with the government on a fiscal framework for the project. If successful, that deal would allow Imperial and its partners to pay lower royalties on the pipeline until they realize pay-out. He said it's similar to the Alberta oil sands project, which required an enormous investment up front and then took years before revenue was generated.

Norwegian said she has little sympathy for the multi-national oil and gas companies, as fuel prices have risen sharply over the past few years.

"It's hard for the government to buy that, saying 'Oh yeah, you poor little company. We'll give you a $2 billion tax break,'" she said. "It's just unbelievable the way they operate."

Rolheiser countered that the project is not based on today's gas prices.

"This is a long, long-term project," he said. "It would be as naive to base the project economics on gas at $12 an mcf (million cubic feet) as it would to base it on the price we saw five or six years ago when it was $1.25 an mcf."