Features  Anatomy of a pipeline

It’s been on the shelf for over three decades, it would envigorate Canada’s northern economy and energy output, but is it a good idea?

It’s not a project. It’s setting our people free.”

Fred Carmichael, chairman of the Aboriginal Pipeline Group, expressed his hope that the Mackenzie Valley Pipeline – a planned natural gas development in the Northwest Territories – will ultimately be constructed. Carmichael’s main concern is providing Canada’s north with the job opportunities and economic benefits that would result from the proposed pipeline, which, once constructed, would transport as much as 1.2 billion cubic feet of gas per day from sites in the Mackenzie Delta (near the Beaufort Sea) through the Northwest Territories to northern Alberta.

“This is no handout, this is a business deal. … This is the reason we’re now full partners. We own a minimum one-third of the pipeline so all our people stand [to] benefit,” said Carmichael.

Energy companies have been interested in drilling natural gas from the Northwest Territories for nearly forty years, though the project has never come to fruition. The issue has resurfaced in the past decade, however, as energy developers have partnered with northern aboriginal groups. But increased competition in the Canadian energy market, government bureaucracy, and questions regarding the long-term environmental costs and economic benefits of the pipeline have left the project in hiatus.

Despite fierce opposition and bureaucratic red tape, 2010 could prove to be a watershed year. The coalition of partners surrounding the project is perhaps the most significant advancement in the past decade, as today’s pipeline supporters include many of its past critics.

A new coalition between aboriginal groups represented by the Aboriginal Pipeline Group (APG) and oil companies has radically changed the situation from previous decades, when aboriginal communities were largely uninvolved and stood to gain little from pipeline construction. The consortium of energy firms is led by Imperial Oil – one of Canada’s largest producers of crude oil – and also includes Shell Canada Limited, ConocoPhilips, and Exxon Mobil. Some estimate that the project would entail an additional federal investment of about $2 million.

Oil companies and aboriginal communities involved in the APG cooperatively support the 1,196-kilometre Mackenzie pipeline, holding their breath (or at least crossing their fingers) for an affirmative decision from the federal government.

Aboriginal groups would receive one-third of pipeline dividends, and, according to the APG, the project would create jobs for their communities.

Carmichael’s sentiments were echoed in my discussion with president of APG, Bob Reid, who stated, “There is very high unemployment in the Northwest Territories, especially among youth. This is an opportunity for better education and on-the-job training.”

Reid also addressed his community’s changing mentality during the past few decades. “The big change over the last 25 or fifty years is that people did live off the land, and now there are so few that depend on the land for living. Youth are becoming part of the wage economy. They don’t want to go chop wood, they want to turn up the thermostat.”

Those pushing for Canada to move away from fossil fuels are staunchly opposed to the pipeline, however, and argue that the benefits of the project have been overstated. “There are significant opportunities for renewable energy, especially in wind power,” said Stephen Hazell of Sierra Club Canada. “There are options of hydroelectric development. That would create more jobs. … We think it will do more harm than good, and there’s not really enough gas there to make it worth while.”

Another environmental group, Ecology North, registered as an intervenor in the ongoing legal proceedings. The group’s program director, Doug Ritchie, also feels that the pipeline is unlikely to create substantial job growth in the Northwest Territories.

“There was not a serious exploration of alternatives to the project,” said Ritchie. “There was not good thinking about that. One thing that is quite startling is that from a permanent standpoint the number of jobs created were about fifty.” Ritchie added that greenhouse gasses from the territory could double if the project goes forward. Part of the problem is that energy would be supplied to the pipeline by burning some of the natural gas on-site.

“Our concern is from an environmental standpoint, and in terms of long-term steady jobs, it seems to not produce that many,” he said. “I think it’s great aboriginal peoples of the North decided to get involved and be partners…but the environmental aspects still remain.”

Despite the fact that the pipeline may create few long-term jobs directly (a fact that Carmichael and Reid both admit), the dividends have the potential to create more jobs indirectly. Reid explained that money from land claim agreements have been invested in northern businesses that provide job opportunities for aboriginal people. According to the most recent report by Statistics Canada, the unemployment rate in the Northwest Territories is 6.4 per cent (versus Quebec’s 7.7 per cent).

“The overall majority [of aboriginal groups affected] are totally in support,” said Carmichael. “You always have the odd one out that opposes, but that’s just democracy. The ones that are going to be affected are going to benefit. They need jobs. They want to be independent and self-sufficient.”

Initially proposed in the early 1970s, debates over land claims, environmental concerns, federal approval and funding, as well as feasibility have all hampered construction of the pipeline. Upon its proposal, the federal government addressed the enormity of the project by leading an inquiry into the environmental and community impacts construction would generate. Justice Thomas Berger was commissioned to assess the impacts of the project on affected communities, and in 1977 his report “Northern Frontier, Northern Homeland” was released. Berger recommended a minimum ten-year moratorium on the project.

The APG was created in 2000, with the signatures of thirty aboriginal leaders, representing three of the four aboriginal communities directly affected by the pipeline construction. (The Inuvialuit, the Gwich’in and the Sahtu nations have partnered, though the Deh Cho nation has thus far refrained from joining the group.)
Both Reid and Imperial Oil representative Pius Rolheiser emphasized that the partnership between the aboriginal groups and the oil companies is the life force of the project, which lacked in vigour by the end of the 1990s. The companies cite this new partnership, alongside improved technology, new construction methods, and settled aboriginal land claims as the chief reasons the project was revived after decreased interest in the preceding decades.

Partners in the project have long awaited approval for the project from the National Energy Board (NEB), which was slated to release its decision last month, though their final decision has met yet another delay. The NEB’s decision is contingent upon a federal government response to a report issued by the Joint Review Panel investigating the project. Supporters now hope approval will be granted by the end of the year. Once the NEB releases its decision, the partner companies will commence a new stage of their own assessments, evaluations, and the gathering of individual permits that will allow them to initiate actual construction.

In response to environmental concerns about the industrial development, Reid insisted that “land and everything that comes from the land is very, very important.”

I was struck by the unity between the APG and the energy companies after talking to their representatives. Both seemed dedicated to the project, and convinced of its benefits. But with each governmental roadblock, the project seems to grow increasingly distant – something I couldn’t help mention when talking to Rolheiser: “After over thirty years, is it still worth it?”

Rolheiser laughed. “Our commitment to the project has not diminished,” he said. “We realized at the outset that the non-technical aspects of the project would be much more challenging than the technical aspects. We’re confident in our ability to build the pipeline. … We said at the outset that this could not and would not proceed without aboriginal support. The fact that we have aboriginal support is key.”

The Mackenzie Valley Pipeline’s prospects are also complicated by an energy market where competition has grown, and become more sophisticated since the 1970s. As of 2006, natural gas already accounted for approximately 24 per cent of Canada’s net energy consumption, alongside oil (32 per cent), hydroelectric (25 per cent), coal (10 per cent), and nuclear (seven per cent).

In recent years, imported liquefied natural gas (LNG) and shale gas have both gained interest as an energy source, and the Canadian natural gas market has intensified. Canada began importing LNG from Trinidad and Tobago last year, and some companies have proposed expanding use of the fuel.

Shale gas is a natural gas generally found in organic rich rocks, acquired by a process called “fracking” that uses water and chemicals to free absorbed gas. A number of provinces have exhibited potential for shale gas production, and governments have hastened to regulate the market. Controversy over shale gas production in Quebec surged this fall, as communities and environmentalists insisted on greater regulation of the burgeoning industry. Earlier this month, Quebec Environment Minister Pierre Arcand announced that companies interested in shale gas exploration will be required to gain a new permit and pass more rigorous inspection than in the past. Ten wells are currently being explored in Quebec, but many more are expected, according to Arcand.

In addition to LNG and shale gas, the Alaska Gas Pipeline Project, headed by Conoco Philips and BP, could potentially deliver 4.5 billion cubic feet of natural gas per day to North American markets. The 1,700 mile-long pipeline would be the largest private construction project in North American history, stretching from the Beaufort Sea to the American Midwest. According to their website, about 5,200 jobs would be directly created per construction season (about 40 million hours of labour).

Rolheiser admitted that the Alaskan gas pipeline would affect markets for Mackenzie natural gas, if both pipelines were completed, although remained confident in the need for Mackenzie natural gas: “From the outset we’ve kept aware of the Alaska gas project…but we don’t see this as a horserace here. We believe [that] in terms of our project, we’re above where Alaska is. If Alaska and Mackenzie were to proceed at the same time, being the smaller project it would probably impact us more…but even with new sources of supply, we continue to be of the belief the North American market needs Mackenzie natural gas.”

Environmental groups opposed to the expansion of greenhouse gas-emitting energy projects and concerned with the possibility of toxic leaks now seem to pose the major political opposition to the pipeline.

“Our biggest problem right now is environmentalists living in high rises in Vancouver and Toronto,” said Carmichael, adding, “They don’t even live here, it’s so hypocritical! They complain about the pollution, but they fly up here and rent a vehicle to drive around…if they’re so damned concerned about the environment they should rent a boat and paddle down the Mackenzie.”

Hazell proffered a far less optimistic view of the pipeline, and in fact, a completely different interpretation of recent events.

“I think the most important thing to realize is that the project is dead,” he said. “The thing is dead.”

Hazell asserted that “there’s no way the federal government is willing to cough up two million dollars to give to the richest corporations in Canada.”

I asked Hazell if the new partnership between some of the richest corporations in Canada and the APG would provide any incentive to the government in supporting what would otherwise be a project headed solely by oil and gas corporations.

“I think that does help the argument, but that doesn’t effect the basic equation that the project is not economic,” he said. “Politically it would just be really bad for the current government to fork over that amount of money.”

Hazell also stated, in contrast to Rolheiser, that the partner companies “realized the technical challenges involved. You’re putting the pipeline through several major rivers, through permafrost. … I think what’s happening is that ExxonMobil has come to understand that they have better opportunities elsewhere.”

Ritchie, however, is concerned that the pipeline will be constructed as planned. “I’m not as optimistic as Hazell,” he said. “I think there’s always the possibility the project could come back to life.”

For now, all await a decision from the federal government that will either halt the program completely, or allow it to move forward toward its next stage of approval. What should have been a peak decision this September from the National Energy Board proved merely to be another valley in the decision-making process for proponents of the pipeline, and critics remain united in opposition to the project, but divided regarding their predictions about it.

For Carmichael, however, the present is bleak: “We have absolutely nothing right now. Give us some alternative to how to put bread on the table.”