Andrea Markey
Northern News Services

Yellowknife (Oct 03/05) - Stephen Kakfwi says the proposed natural gas pipeline is "doomed" and Premier Joe Handley calls Imperial Oil's requests to the federal government "excessive."

Kakfwi, negotiator for the K'Asho Got'ine Dene of Fort Good Hope and former premier, was commenting on media reports the company has asked the federal government for royalty and tax guarantees for the proposed $7 billion Mackenzie Gas Project.

Premier Handley: "Their request is excessive."

Imperial isn't saying what it wants from Ottawa, but the Sierra Club, an environmental watchdog group, says the company wants concessions totalling $2 billion.

"There are negotiations underway - the specifics of which are confidential," said Gordon Wong, a spokesperson with Imperial.

"I can say the Mackenzie Gas project needs to compete on a North American-wide basis. A number of factors beyond just the price of natural gas are used to evaluate a project of this size."

The form of the financial agreements to make the project attractive is yet to be determined, he said.

"I had heard they are asking for $2 billion in the media," said Premier Joe Handley.

The premier said he knows the company is looking for assurances on royalties and tax rates for the life of the project, as well as financial breaks on the development of the pipeline.

"That's a tough sell when oil prices and gas prices are skyrocketing," he said. "While gas may not stay at $13 or $14 (per thousand cubic feet), it is certainly not likely to go back to $2.50 or $3.

"Their request is excessive."

It is estimated the proposed pipeline would generate more than $40 billion in cumulative revenue.

Under a payment plan developed by Kakfwi, aboriginal groups would receive $47 million per year to allow the pipeline to cross their land.

"Imperial has the chance to leave communities looking proud, strong and self-sustaining," said Kakfwi. "Quite a legacy.

"Instead all Imperial is going to be remembered for is grabbing everything it can."

Imperial has offered one-time payments for four settlement areas along the pipeline route, but has not signed access and benefit agreements with any group.

In April the company announced it was stopping all non-regulatory work on the pipeline, citing unreasonable requests from aboriginal groups.

"I think they are just looking for a reason to shut it down because they have mismanaged it so badly," said Kakfwi.

"This pipeline is doomed to failure, I think. I don't see Imperial trying to go out of its way to make deals with anybody and I don't see the leadership out of the federal government to put a deal together."

Inuvik's mayor Peter Clarkson is more than a little confused over Imperial's strategy, but he doesn't believe it spells the end for the project.

"There is a lot of profit there to be made so I think it will proceed," said Clarkson.

The GNWT is a recent party to the discussions between the federal government and Imperial due to the possibility of devolution, said industry minister Brendan Bell.

"I think there is a negotiation going on with offers and counter-offers," he said.

Imperial's November deadline for public hearing readiness relies heavily on progress with access and benefits agreements, while financial negotiations with the government are in its early stages, he said.

"I'm not concerned if everything works in November and we enter the regulatory phase," he said. "I'm very concerned if Imperial decides not to do that."

- with files from Jack Danylchuk