Mackenzie Valley - Where pipe dreams, fears collide

As hearings begin into the Mackenzie Valley pipeline, Report On Business energy reporter Dave Ebner, in a three-day series, examines the $7.5-billion plan to slake the South's thirst for natural gas.

Part 1: Where pipe dreams, fears collide

Part 2: Pipe dreams

Part 3: A delicate balance in a delicate place
Dave Ebner, Globe and Mail, 23-25 Jan-2006

By Dave Ebner
Globe and Mail
23-Jan-2006

FORT SIMPSON, NWT

It is a cold, clear day. The January sun sits low on the horizon, the temperature hovers around -30 C. Jonas Antoine, a 64-year-old Deh Cho elder, peers through the window of an old trappers cabin, the embodiment of the way people of the north lived and survived on the land for hundreds of years, an era now nearly ended.

The cabin is about a 20-minute hike from a large staging ground that would be used to help build the proposed $7.5-billion Mackenzie Valley natural gas pipeline, a thump of heavy industry in an almost pristine wilderness.

Mr. Antoine fears the land will be irrevocably shaken by that thump - and by the development that will follow. On Wednesday, the first of many publics hearings are set to begin in Inuvik.p

The epic regulatory process will assess the pipeline, a project that has divided northern communities, pitted tradition against progress and threatened to derail the north's biggest enterprise.

"We want to hand the land to our grandchildren the way we received it, not polluted and not disemboweled," Mr. Antoine says.

Later in the day, about 20 kilometres away at Thomas Simpson High School in the village of Fort Simpson, Mikhaela Antoine works on her resume in the library. The 15-year-old Grade 10 student is Mr. Antoine's niece and wants to become a nurse, or maybe a pediatrician. She says Fort Simpson needs better health care and she supports the proposed pipeline.

"So we can buy things," she says, "things that we need."

Fort Simpson, home to about 1,270, is the centre of Deh Cho land, and the divides among families and the village are found throughout the Northwest Territories. There is as much hope here for future prosperity as there is uncertainty about what ills development might bring.

Those divides underlie the process ahead, with 137 meetings set through the entire year to vet the 1,200-kilometre pipeline that would carry gas from three major fields in the Mackenzie Delta to existing infrastructure in Alberta.

There is no doubt southerners need the gas. The price of the commodity stands at quintuple the rate of the 1990s, squeezing businesses and making for jarring home heating bills.

Need for the line in the north is less clear to some residents, people who don't believe locals will benefit, that the gas and dollars will flow south, leaving little for northerners.

"I don't approve of it," says Louisa Lafferty, the employment co-ordinator at the band office in Fort Good Hope, a hamlet of about 550 residents just south of the Arctic Circle. "We don't have enough people trained. Are our people going to get an opportunity?"

There is already one pipeline running through part of the region, built in the 1980s from Norman Wells to northern Alberta to carry oil. For most northerners, it brought no tangible benefits - just 10 jobs in Norman Wells and eight in Fort Simpson.

The pipeline runs right behind the trappers' cabin, and the gas pipeline would cut through just several kilometres away.

Keyna Norwegian, chief of the Liidlii Kue First Nation, part of the Deh Cho, thinks the gas line will be another disappointment.

"I don't see it as a benefit or a need for the people of the Deh Cho," she says in her office in Fort Simpson. "Everybody says, 'What are you going to do for jobs?' We've survived thousands of years; I'm sure we can survive the way we are."

Deh Cho territory covers roughly 40 per cent of the proposed pipeline route, the southern end. The area has already seen and benefited from some energy development around Fort Liard, near the British Columbia border. But further north, in places like Good Hope and Inuvik in the Delta, there is barely any economy at all. Without government, there is almost nothing - and no prospects.

It is another divide, one where residents of the Delta see first nations further south jeopardizing their future, their only chance to build a sustainable economy.

"There is no industry in this area," says Fred Carmichael, based in Inuvik and president of the Gwich'in Tribal Council, which is a strong supporter of the pipeline. "This is critical to the north. Sure, there's a downside to everything. But, you know, anything's better than raising your children on welfare."

The biggest challenge, he says, is training, making sure his people are ready to take advantage when the time comes.

Like many northern leaders, Mr. Carmichael grew up on the land, born in the Delta, hunting and trapping until his late teens. He then pursued a career as a pilot and started an airline. It is another divide, the last generation to live on the land and the first generation to embrace the ways of the south.

Now 71, Mr. Carmichael wants more for his people than government handouts. And he rejects emotional arguments about traditions and living off the land.

"If kids want a light, they flick a switch. They want heat, they turn up a thermostat. They don't go chop wood or haul it out of the bush. They don't know how. So let's stop fooling ourselves and say we want to go back to the land. . . . Let's be real here, and say, 'Listen, we've moved on. The land was good to us. We can no longer make a living out there but the creator has provided an alternative for us.' "

The Inuvialuit also call the Delta home and also strongly support the pipeline. Like the Gwich'in, and the Sahtu in the central Mackenzie, the Inuvialuit have settled land claims, deals that underscore their backing for the project. The Deh Cho in the south are the fourth group on the route but have no finalized claim with Ottawa, a lack of legal standing that underscores discontent and distrust in that region.

Back at the school library in Fort Simpson, a couple of students are playing guitar in the corner after classes are over. The words of Mr. Carmichael don't resonate with everyone here. While Mikhaela Antoine helps a friend with her resume, two other students sit nearby, explaining why they came away from a meeting of youth organized by the territorial government in Yellowknife in November opposed to the pipeline.

"I went in liking the pipeline and I came out not liking," says Jessy Leahy, a 16-year-old Grade 11 student. A presentation from Environment Canada officials influenced him in particular. "All the ecosystems in the region will be affected by the pipeline," he says.

Jackie Thompson, a 15-year-old Grade 10 student, says the repercussions of development will be felt by her generation, not the current leadership that mostly supports the pipeline.

"It's going to be us that will have to deal with the problems of the land and the drugs and alcohol it will bring."

Outside, it's about four in the afternoon and the sun is setting over Fort Simpson, situated on a small island where the Liard and Mackenzie rivers meet. The trees - aspen, spruce, pine - are all white, covered thick with hoarfrost, stunningly beautiful. But the hoarfrost here isn't normal, occurring so intensely this year only because December was unusually warm and wet.

For Herb Norwegian, Deh Cho grand chief, the hoarfrost is not a good omen. He has stood opposed to the pipeline, arguing the Deh Cho aren't being treated fairly. He too grew up on the land and feels it changing. "It's apocalyptic, like a nuclear winter," Mr. Norwegian says. "The only thing missing is the four horsemen. . . . You can almost hear the bulldozers rumbling."

He speaks passionately but divides are everywhere. His older brother, Robert Norwegian, works in the Deh Cho area as a regional liaison for Imperial Oil Ltd., the pipeline's main proponent.

Robert Norwegian spent several decades working in the pipeline business in Alberta. Like Mr. Carmichael, he says the past is gone but what's replacing it is valuable, too.

"It's not just like it was in the '70s here. People had outdoor shithouses. No phone. Wood for heat," Mr. Norwegian says.

While not a rich community, Fort Simpson has amenities and advances are being made. High-speed Internet became available in December. It is progress that's underpinned by oil and gas, Mr. Norwegian says, fuels that make everything from snowmobiles to air ambulances possible.

It is divides that define pipeline talk, divides that run so deep that getting to this week for public hearings has taken more than three decades. A pipeline was proposed and rejected in the 1970s, before land claims had been settled.

Work began anew in 2000 - six years ago. "I understand what [Herb] is talking about but I believe what I'm doing is right," Robert Norwegian says. "But how can you say no to a lifeline that keeps you alive? That's what I say."

Pipeline primer

The proposed Mackenzie Valley gas project would be the biggest construction effort ever in the Northwest Territories, consisting of two pipelines and three major gas field developments.

- The main 30-inch gas pipeline would begin near Inuvik and run 1,194 kilometres to northern Alberta.

- The Aboriginal Pipeline Group, made up of three northern first nations organizations, would own one-third of the main pipeline.

- The cost of the entire project is estimated at $7.5-billion, with roughly $4-billion for the main pipelines and $3.5-billion for fields and gathering systems.

- The project would cut through mostly untouched wilderness and spur further development, raising environmental issues.

- First nations peoples are worried about traditional ways of living off the land and how many benefits - jobs, cash - they will see from the project.

- Imperial Oil, the main proponent, says the project is only marginally profitable and worries cost will escalate further.- A 10-inch pipeline from Inuvik to Norman Wells would carry gas liquids - very light oil - and connect with an existing Enbridge crude line.

- The fields - Taglu, Niglintgak and Parsons Lake - contain about six trillion cubic feet of gas, which once connected would increase Canada's proved reserves by 10 per cent and are enough to warm all Canadian gas-heated homes for six years.

Arctic ventures

As hearings begin into the Mackenzie Valley pipeline, Report On Business energy reporter Dave Ebner, in a three-day series, examines the $7.5-billion plan to slake the South's thirst for natural gas. Tuesday: Paving the way for a new gas route, one deal at a time. Wednesday: The North gets industrious.

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Some see benefits to the Mackenzie Valley pipeline, while others fear damage that development could bring

By DAVE EBNER
Globe and Mail
Tuesday, January 24, 2006

FORT GOOD HOPE, NWT — The icy winter road to Fort Good Hope is rugged and rutted, a winding, 149-kilometre route northwest from Norman Wells that roughly marks the proposed route of the Mackenzie Valley natural gas pipeline.

It is barely a road at all, only in service for three months during the year's coldest season when the ground is frozen. It runs through otherwise untouched boreal forest, through bogs and past streams, over ground populated by moose and caribou and lined with spindly trees, vegetation that thins as the Arctic Circle approaches.

Severe ups and downs limit the speed on the remote road to no more than 20 kilometres an hour at times. The challenge of making the trek is much like the journey being made by the first nations peoples of the north, a difficult one that has divided communities and regions along the Mackenzie River, the longest river in Canada.

While year-long public hearings to review the $7.5-billion pipeline project begin tomorrow, unity among first nations remains tenuous. Divides have slowed, stalled and almost stopped the project.

"We have to start getting out of our tribal thinking," says David Codzi, sitting in the large log cabin community hall in the hilly hamlet of Good Hope, on the Mackenzie River. The 31-year-old is a rising leader from Colville Lake, northeast of Good Hope, two of the five communities in the area covered by a land claims settlement with the Sahtu people. The Sahtu are one of four aboriginal groups affected by the project.

"Everybody has to be working for one another," Mr. Codzi says. "It's the only way to get ahead as a region, trusting one another. One area's wealth can bankroll the next."

Trust and co-operation ebbs and flows among northern first nations. In 2001, the Aboriginal Pipeline Group was formed, an organization driven by Inuvialuit and Gwich'in, whose homes are centred around the Mackenzie Delta, where three major gas fields were found in the early 1970s. It has the best prospects for future exploration and development.

The Sahtu are also part of the Aboriginal Pipeline Group, which would have a one-third ownership stake in the pipeline and possibly see $20-million in annual profit. But the Deh Cho First Nations, a coalition of smaller groups further south, never joined -- and remain outside the organization.

Divisions are everywhere. Among the Sahtu alone, there are seven land corporations that rule over five communities, not one of them home to more than 1,000 people.

The many divisions led to years of arduous negotiations for a pipeline that was supposed to be in service next year and now won't be moving gas until late 2011, at the earliest.

The battles intensified last year. Imperial Oil Ltd. -- the pipeline's main proponent -- halted work on the project in April, largely because of what the company called unreasonable demands from first nations over contract terms for benefits and access to their land.

The federal government moved to break the impasse in the summer between Imperial and the first nations groups, promising $500-million over 10 years for social and economic concerns.

Stephen Kakfwi, born in Good Hope and a former premier of the Northwest Territories, had been demanding on behalf of the Sahtu annual payments directly from Imperial, tired of always standing with a hand out hoping for dollars from distant Ottawa.

But when the pressure grew to finalize deals last fall, Mr. Kakfwi says he was pushed out of his job as a negotiator.

"They said, 'Jesus, Steve is going to kill the pipeline,' " Mr. Kakfwi remembers during an interview in Yellowknife, saying he pressed for $8-million a year just for Good Hope. "I was trying to get people to see we could get a better deal. . . . [But] Good Hope was read the riot act by Imperial and the federal government."

Back in Good Hope, home to about 550, the local leadership remembers the story differently, saying Mr. Kakfwi would make declarations on behalf of the community when he didn't have the authority to do so.

"[Stephen] speaking up on the radio really put a crimp on the negotiations," Arthur Tobac, president of one of the land corporations in Good Hope, says a couple of hours before a community fiddle dance. The Sahtu got a good deal, Mr. Tobac insists.

"We've done the best we could on all sides."

Later in the evening, just ahead of the boisterous community dance that draws more than 100 people of all ages, chief and mayor Ronald Pierrot says he isn't totally satisfied with the results but suggests intransigence is reasonable only to a point.

"You don't want to be pushing Imperial over the edge. Then you won't be getting anything," Mr. Pierrot says.

The hard talks wore everyone down, says Imperial's top executive on the Mackenzie project, but once a sense of urgency gripped the negotiations, progress was finally made.

"Once you talk through the issues for weeks or months like this thing has gone on, people not surprisingly can lose patience and question each other's intentions and real commitment," says Randy Broiles, Imperial senior vice-president.

"[But] once the aboriginal communities understood we didn't have two or three more years to continue to talk through the benefits and access side of things, that's when the breakthrough started coming."

The Inuvialuit and the Gwich'in have approved their benefits and access deals, agreements that outline key items such as dollars for land through which the buried pipeline will cross and preferential use of first nations businesses.

The Deh Cho have no deal and say they have been treated poorly by Imperial because they are the only group on the pipeline route without a settled land claim. But the situation improved in December, says Keyna Norwegian, a Deh Cho leader.

Still, she remains against the pipeline, though other communities in the Deh Cho are in favour.

The southern portion of the Sahtu -- whose centre is Tulita -- has also signed on. Good Hope and Colville Lake vote Feb. 8 on the benefits and access agreement. The outcome is not a given, though by most rough counts about two-thirds are in support of the pipeline, a figure that appears consistent in Good Hope and through the Mackenzie Valley.

Carol Jackson isn't convinced. Walking with her young son Theodore as the sun sets over Good Hope in the late afternoon, the temperature falling toward -40, she doesn't see what her town will get out of the massive development.

"All together, I'm really against it," says Ms. Jackson, 35, bundled in a parka, cuffs lined with marten fur and hood lined with wolverine fur.

"If it does go through, it'll just destroy what I grew up with."

But the hunting and trapping world of Ms. Jackson's youth is fading. Kids in Good Hope these days are like kids anywhere, listening to iPod nanos and thinking about what they want to do when they grow up.

The debate in a classroom at Chief T'Selehye School is lively and varied. Matthew Pierrot, 16, is the mayor's son and believes jobs will follow the pipeline.

"If the pipeline goes through, this will become a working town," the Grade 10 student says.

Sixteen-year-old Lyndon Kakfwi, in Grade 10, is blunt in his opposition: "I hate the pipeline. It'll ruin [the land]. It sucks."

Grade 12 student Joel Lafferty, 17, sees it both ways. "In some ways, yes, for the economy and stuff. In some ways, no, for the environment. That's what everyone's concerned about."

After natural gas was discovered in the early 1970s, a pipeline proposal quickly followed. Good Hope was the site of the galvanizing moment of the public review three decades ago, when then-chief Frank T'Seleie gave an impassioned speech in which he declared a pipeline would mean "that we are destroyed to make someone else rich."

At the legislative assembly in Yellowknife, the member for the Sahtu stands back from the details of the today's debate and sees a greater historical significance when looking from the seventies to the present.

"We didn't have that type of authority or legitimacy to negotiate," MLA Norman Yakeleya says in his office.

"It's good today, in the sense that the oil companies now have to deal with us. Before, they didn't have to. It was a real wake-up call for them to sit across from aboriginal leaders. . . . We can hire a lawyer, just like them."

In Wednesday's ROB

Dave Ebner travels to Inuvik, where the pipeline hearings begin and hears optimism that development is the answer over government dependence and poverty.

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By DAVE EBNER
Globe and Mail
Wednesday, January 25, 2006

A delicate balance in a delicate place Public regulatory hearings begin Wednesday to examine the impact of the proposed Mackenzie Valley pipeline on the environment and people of the Northwest Territories, and prime mover Imperial Oil isn't even sure the $7.5-billion effort is worth it.

INUVIK, NWT — The birthplace on Joe Handley's birth certificate testifies to his connection with the land. Born in the bush, the document forgoes the name of a precise place for a more general co-ordinate: "Sec. 3, Tp. 59, Rge. 18, W. 3, Saskatchewan."

Mr. Handley, now Premier of the Northwest Territories, is still connected with wild, untouched land, living on a lake about 30 kilometres outside of Yellowknife. But he wants his territory of about 43,000 residents to step into the future as well, sharing in the benefits of industrial development while taking care to preserve the gorgeous and varied landscape of the North.

It is striking that delicate balance in this delicate place that is a central theme of public hearings that begin today in Inuvik, on the Mackenzie Delta in the Northwest Territories. A series of 137 regulatory meetings in small towns and even tinier outposts will consider the proposed $7.5-billion Mackenzie Valley natural gas pipeline.

"Even if people don't make their living off the land any more, people still remain close to the land," Mr. Handley says. "There are things that are more important than money. But you can't have it all one way or all the other way. There has to be a balance. . . . As great as the jobs and opportunities are, it's sure nice to sit on a river bank and see a real river flowing by and not have to worry about noise or pollution. Getting that balance is a big challenge for us."

The people of this territory look at northern Alberta, many repulsed by the gigantic strip mine that is the Fort McMurray oil sands.

They look at smog-choked Toronto.

They worry.

This cold, remote place is changing. Arctic activists fight to tell the world that the polar ice is melting, irrevocably affecting the region. Caribou, a onetime staple on dinner tables, is no longer served in Inuvik restaurants as the herds dwindle.

The temperature in Inuvik wavers somewhere lower than -30 C. Nellie Cournoyea, the chief power broker of this town, sits in a boardroom of Inuvialuit Regional Corp., a major pipeline supporter that connects roughly 140 local firms.

The Inuvialuit, one of four first nations groups along the pipeline route, were the first to settle a land claim, in 1984, and that deal protects the delicate environment alongside promoting development, insists Ms. Cournoyea, the corporation's CEO. "If provisos of the claim are respected, there will be a balance," she says. Environmental issues "don't take a secondary role. They're equally important."

While the economy here -- beyond government money -- is extremely weak, the Inuvialuit have had successes, making a profit of about $20-million in 2004 on revenue of more than $160-million. Among their partners is Calgary-based Akita Drilling Ltd., the company working on the Devon well, the first offshore venture in the Beaufort Sea in 17 years.

According to various estimates, there is enough gas in the Delta and the Beaufort Sea to rival proved current reserves in the rest of Canada.

Such potential ripples down the winding Mackenzie River valley.

David Hodgson -- owner of a contracting business in Norman Wells in the central valley -- feels the rumbles of industrialization. Working on his shop floor surrounded by heavy equipment, his hands are greasy, he's wearing a baseball cap and smoking a cigarette. It is -35 C outside.

He's a successful businessman. The North is where he was born; like most residents, the open, empty spaces resonate in his heart.

"It's got to be done right," the 43-year-old says. "Once that pipe comes, it won't stop."

It can be done right, says Judi Falsnes, who owns Arctic Chalet Ltd. just outside Inuvik with her husband Olav. They offer accommodations in individual cabins, often hosting workers in the oil and gas business, and provide dogsled tours through the woods and over nearby lakes, keeping a kennel of 25 rambunctious and barking Colville Lake huskies. The dogs are beautiful animals, with remarkable pale blue eyes and irresistibly cuddly, furry white like the vast stretches of snow all around this place.

Last May, the Falsneses visited Alaska, to see what the oil pipeline through that state -- built in the 1970s -- brought to the land and people. They came away reassured that a line down the Mackenzie won't ruin their territory.

"I know oil and gas can bring negatives," Ms. Falsnes says. "But if people make wise choices, it can be beneficial."

The National Energy Board begins public hearings today, with 62 dates planned through the year, primarily to assess the technical and economic merit of the pipeline proposal.

But the more emotionally significant meetings start in February, also in Inuvik, led by a joint review panel formed by the federal government and northern first nations' regulators in 2004 to examine the impact of the project on the environment and the region's people. The panel has 75 meetings planned, visiting the most distant communities.

Robert Hornal, a long-time consultant and federal civil servant in the North, chairs the seven-member group. Like Justice Thomas Berger in the 1970s, Mr. Hornal's panel will visit tiny places like Colville Lake, home to 135 north of the Arctic Circle, and Trout Lake, home to 80 in the southern NWT.

"In some places, my team may outnumber the residents of the community and that sort of scares me," Mr. Hornal says. "I hope it doesn't overwhelm them but I suspect they'll still want to talk to us."

Everything about the project threatens to overwhelm the region. About 12,000 construction workers will come here to build the line in the winters of 2009 and 2010, more than a quarter of the territories' populace and most will come from the outside. In just one example, Fort Good Hope, a hilly hamlet of 550, will host a work camp of 1,350, one of four instant towns planned along the construction route.

As year-long public hearings begin, the project's principal backer, Imperial Oil Ltd., isn't sure the effort is actually worth it.

"As you know, the Mackenzie project is very lean, from an economic standpoint," Randy Broiles, Imperial's senior vice-president leading the project, says in a small boardroom beside his office at company headquarters in Calgary.

The cost of the project has escalated, from $5-billion several years ago to an estimated $7.5-billion.

Mr. Broiles suggests the demands that come out of the regulatory process could be too much. Asked how much is too much, he doesn't give a precise answer -- leaving this whole epic, wrenching process in limbo.

"If you'd asked me that six months ago," Mr. Broiles says, "I would have said $7.5-billion was too much."

The prize

ConocoPhillips Co. controls the onshore Parsons Lake gas field, one of the three that would initially supply the pipeline. Further offshore, Conoco is sitting on 350 million barrels of oil in the Amauligak field. Devon Energy Corp.'s $60-million well drilled this winter out in the shallow frozen waters of the Beaufort Sea testifies to the area's potential. Armed with the first set of advanced 3-D seismic data ever collected in the area, Devon is hunting for a huge field of gas that could rival the giant Taglu field onshore, controlled by Imperial Oil Ltd.

The project

The main pipeline would run 1,200 kilometres down the Mackenzie Valley, connecting three major natural gas fields in the Delta with northern Alberta. The line is a single ribbon of steel, just 30 inches in diameter and buried, the conduit for a massive, Alberta-like oil and gas development.

Impact

Everything about the project threatens to overwhelm the region. About 12,000 construction workers will come here to build the line in the winters of 2009 and 2010, more than a quarter of the territories' populace. Most will come from away. In just one example, Fort Good Hope, a hamlet of 550, will host a work camp of 1,350, one of four instant towns planned along the construction route. The fragility of the Arctic ecosystem is a concern, as are potential societal ills brought by industrialization and its effects on a traditional way of life.

The hearings

The National Energy Board begins public hearings today, with 62 dates planned through the year, primarily to assess the technical and economic merit of Imperial's proposal. But the more emotionally significant meetings start in February, also in Inuvik, led by a joint review panel formed by the federal government and northern first nations' regulators in 2004 to examine the potential impacts of the project on the environment and lives of the people in the project area. The joint panel has 75 meetings planned, visiting the most distant communities.

'All the guys that are good and want to work are frigging working, that's all I can say. There's no shortage of work.'

David Hodgson, above, owner of a contracting business in Norman Wells, NWT

Conversation with. . .

Dave Ebner

Reporter Dave Ebner of The Globe's Calgary bureau answers your questions at 10:30 a.m. Wednesday on the $7.5-billion Mackenzie Valley pipeline project in a real-time, on-line discussion at globeandmail.com

Read the previous two stories (Part 1, Part 2) in our three-day series on how the native tribes of the Far North both fear and eagerly await the start of construction on globeandmail.com/business.

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