CASR

Canadian
American
Strategic
Review

Northern  Development  –  Oil & Gas  –  Strategic  Resources  –  January  2008 Mackenzie  Valley  Pipeline  –  The  ' Wealth  of  Nations '  is Founded  on  Fossil  Fuels  –  But  What  about  the  Future? CASR  Editor ,  Dianne  DeMille ,  presents  a  brief  outline  of  a  complex  story Proposed  Pipeline  to  bring  Gas  from  Mackenzie  Delta  &  Valley  to  Alberta  The ecology of the human species includes a subset  we call  ' the economy '.  But  there are actually many  different  types  of  human  economies.  There  is the  'subsistence economy ',  under which people live off  the  land.  Another  is  a  'resource  economy',  where  the source of wealth in a given region are the natural  resources  found  in  the  ground ,  or  in  the  waters.  In the  mid-20th  century,  the  Northwest  Territories  was  primarily  a ' subsistence  economy '.  Whatever  natural  resources were exported  –   gold,  diamonds,  furs  –  contributed to the wealth of a few,  not to the  people who lived in the NWT.  So,  when  natural gas  deposits were found  in the  Mackenzie  Delta,  and in  many other locations along the Mackenzie Valley, the  Berger  Enquiry  was set up to determine  whether the  people  of  the  Northwest  Territories  would  benefit  from  the  exploitation of  this  natural  resource.  The  answer  was a  resounding  'No'.  Why?  Because  the  First  Nations  of  the  Northwest  Territories  had not  settled  their  land claims  with the  nation  of  Canada. Fast forward to the early 21st century. According to the 2006 Census, the population of the Northwest Territories is about 42,000.  Almost 45% of  those people  live in the City of  Yellowknife.  Fully one-third  are between the ages of 25 and 44.  The majority of  these people are no longer satisfied with a subsistence economy. They want good jobs with decent salaries.  Most of  them want  hunting and fishing to be recreational activities  –  not  a  constant  matter  of  life  and  death,  for  them  and  their  families. The  leaders  of  the  NWT  First  Nations  –  the  Inuvialuit,  Gwich'in,  Sahtu,  Métis and others  –  have spent the intervening years hammering out land claim settlements with  the  Government  of  Canada.  Now,  these  leaders  are  supporters  of a pipeline. Natural  gas and natural  gas  liquids  [ NGL ]  will  be  carried  south  from  the  Delta to  northern  Alberta.  With  land  claim  settlements  in  place,  the  people  who  live along the  Mackenzie Valley  can  now  profit  from  the extraction  and  transport  of the  fossil  fuels  of  the  North. Oil  &  Gas  Sector  Pays  Higher  Salaries,   But  Requires  Rigorous  Training  The oil  &  gas sector  provides  much  higher  salaries,  as  compared  to  retail,  the  service  sector,  or  manu-  facturing  jobs.  However,  much is also demanded  of  people  who  want  to  work  for  oil  &  gas companies,  or  for  pipeline  and  other  construction  contractors:  1)  The  work  is  physically  hard,  usually  outdoors,  in  miserable  weather,  especially  at  the  entry-level. 2) Natural gas is a commodity.  The price for gas rises and falls over time.  Because of  these ups and downs in the market,  any employment  in the resource sector can be a series of  peaks and valleys  for  the workers. 3) Even for entry-level jobs, specific skills are needed. Fortunately, it is in the interests of the federal govern- ment, the industry, the territorial government, and the colleges to ensure  that training courses are available. Combining  Efforts  to  Deliver  Training   –   College,   Industry,   and  Governments   Some residents of  the  Northwest  Territories want to   get  training  for jobs  in the oil  & gas sector,  but are   reluctant  to leave their home communities to take the   courses.  Aurora  College,  with  a campus  in  Inuvik ,   is the only post-secondary facility  in  the  Northwest   Territories.  The  college  managed  to raise  $2  million   from industry and government,  in order to purchase a   mobile  trades  training  unit.  The  MTTU  looks  like a   tractor trailer,  but it can  unfold  into a classroom  with   space for 12 students. This mobile unit allows teachers   to get  'hands-on' training to remote communities.  If  it   cannot be driven  to  its  destination,  it can be barged. Aboriginal  Pipeline  Group  will  own  thirty-four  percent  (34 %)  of  the  Pipeline The Aboriginal Pipeline Group (APG) is an incorporation of the First Nations that live along the Mackenzie Valley, in regions affected by the proposed pipeline. The leaders who are involved  in the APG  believe that they have  hammered out a deal  which will benefit their people in the long run. The APG will borrow money from a group of  banks  in order to pay for their share in the pipeline project.  The initial size of  the  loan  has been determined  by estimating how  much  gas  will  flow  through  the  pipeline. The large corporations who are the 'producers' of natural gas will sign long-term shipping contracts,  and  will  pay  fixed fees to transport the gas extracted  from  the  Mackenzie  Delta,  and  other  locations along  the valley.  The natural gas will be shipped to a terminus in  northern  Alberta. All pipeline owners, including APG, will receive their share of the transportation fees after  the operating  costs of  the pipeline  have been paid.  APG  will use some of  its revenue to repay bank loans. The balance will be paid as dividends  to the respective shareholders  –  the  First Nations  who make up the Group.  They are free  to use the dividends in ways to be decided by  the people who comprise  each aboriginal group. The percentage owned by each group is as follows:                                            •   Sahtu                   34 %                                            •   Gwich'in             20 %                                            •   Inuvialuit              4 % The Deh Cho  First Nation leaders have decided not to participate in the APG  for the present. However, their share of  34 %  will be held  for them  –  should  they  decide to join  the  Group  later.  The  remaining  8 %  share  in  the  ownership  of  the  pipe- line has been set aside for other aboriginal groups living in the Northwest Territories. The financial  plan for  the Mackenzie Gas Project  (MGP)  has been submitted  to the Minister  for  Industry  Canada ,  Jim  Prentice ,  who  was  formerly  the  Minister  for Northern  Development.  If  Industry Canada  is  satisfied  with  the feasibility of  the financial  plan,  it will be forwarded to the National Energy Board (NEB)  for approval.