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The lust for gas

The Mackenzie Valley pipeline was almost a certainty in the mid-70s. Our 1975 feature explored the costs and the beneficiaries of the pipeline that never did get built


 

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Sam Raddi is a 44-year-old Eskimo from Sachs Harbor on Banks Island in the Arctic Ocean. He finished his schooling after grade four and was an expert hunter. Now, blinded by drinking antifreeze on a spree 17 years ago, he no longer hunts, but he is the chief spokesman for the Eskimo people (or Inuit, as they prefer to call themselves) in the Western Arctic and, unlikely as it may seem, he could have a tremendous impact on the rest of Canada in the years to come. Sam Raddi insists that the Eskimos, together with the Indians of the North, own most if not all of the land in the western half of the Northwest Territories, and they want these land claims settled before any pipeline is forced on them by Canadians in the South. The federal government, while agreeing to negotiate a settlement, has refused to commit itself to a development freeze before a settlement is reached, and at this point a confrontation appears inevitable. After listening to himself described as a “20th-century General Custer” by an irate Indian chief last summer, Bob Blair, president of Foothills Pipe Lines, said: “I don’t think anyone here is close to violence, but I can see if this thing is really jammed down their throats, there could be some sabotage and sniping.”

Talk of native land claims in the Northwest Territories must seem a little inconsequential to most Canadians. After all, the Territories are far away and, although fully one third of the country’s land area, they account for less than one fifth of 1% of its population. They are the last place in North America where the natives still have a majority (there are 14,000 Eskimos, 14,000 whites, 7,000 Indians, and 7,000 Métis). But what the Territories lack in numbers they make up for in resources, and when we start running out of oil and gas in the south we will be looking more and more to the North as a source of fuel.

The big, foreign-owned oil companies, such as Imperial, Gulf and Shell, have already spent some $500 million exploring the region and have found natural gas and a little oil in the Mackenzie Delta. But they need a pipeline to take the fuel to southern markets.

Canadian Arctic Gas Pipeline Ltd., a consortium of 17 companies, half of them American-owned, and Foothills, a Canadian-owned operation based in Alberta, are each proposing to build a natural gas pipeline down the Mackenzie Valley, the traditional home and hunting grounds of the native peoples. Canadian Arctic Gas would also extend the line northwest from the Mackenzie Delta to pick up gas at Prudhoe Bay in Alaska for delivery to American markets. Foothills is proposing an entirely Canadian line for Canadian markets alone. Only one of the proposals will get government approval. In October, the National Energy Board opened hearings in the chandeliered ballroom of Ottawa’s Chateau Laurier hotel which could last up to a year, with dozens of interested parties—ranging from provincial governments to the Committee for an Independent Canada—presenting arguments.

Whatever the NEB’S final decision, it must be ratified by the cabinet, which has worked closely with the major oil companies in planning the pipeline and which, some observers believe, has already made up its mind to build it.

The notion of a pipeline down the Mackenzie Valley was conceived in 1968, when oil was discovered in great quantities in Alaska’s Prudhoe Bay. The Americans had to get their oil to market—the Canadian government proposed that a pipeline be built down the valley to get it there. But the Americans opted for a pipeline across Alaska instead, the oil being shipped the rest of the way to the “lower 48” states, as the Alaskans say, by tanker. Undaunted, the Canadian government began pushing for a gas pipeline, which could carry south both Canadian and Alaskan gas. The government saw the pipeline as a means of promoting development in the North. The views of the natives in its path were barely considered.

“The pipeline was supposed to be an engine of growth,” laments one senior government official. “I find all this talk about stopping it rather strange.” But the natives, once passive in the face of decrees from Ottawa, were just beginning to stand up for their rights. Exposed for the past 20 years to government schools and the CBC, they began to question the decisions being made on their behalf. They also began asserting their claims to the land they have occupied since they crossed the Bering Strait from Asia, the Eskimos moving to the coastal lands north of the tree line some 6,000 years ago, the Indians trekking inland 20,000 years earlier. (The white man did not come to the Mackenzie Valley until 1789, when Alexander Mackenzie first navigated the river that now bears his name.) The pipeline gave the natives a lever to press for settlement of their land claims. They know the government and industry will agree to negotiate a settlement if they feel a pipeline cannot be built without one.

Eskimos and Indians have rarely acted in unison in the past, but the pipeline and the land claims have given them common cause. The sense of unanimity has been strengthened by the hearings of Mr. Justice Thomas Berger, the BC Supreme Court judge and former provincial NDP leader who was appointed by the federal government to investigate the social and environmental impact of a Mackenzie Valley pipeline. Berger began his one-man inquiry last March and, moving from village to village in the valley, he has provided the natives with a forum in which to express their consensus: no pipeline before a land settlement. The federal government also gave the native organizations grants to develop their legal claims. The Indian Brotherhood and the Métis Association were granted $1.2 million between them, and the Inuit Tapirisat (Eskimo Brotherhood) received one million dollars. That sounds like a lot, but it’s peanuts beside the $83 million spent by Canadian Arctic Gas and the seven million dollars spent by Foothills preparing their pipeline proposals. The natives have used the money to conduct research and to hire outside help. The Indian Brotherhood, for instance, imported Mel Watkins, the former NDP Waffle spokesman and University of Toronto economist, which infuriated some white northerners who view Watkins as a super-radical parachuted in to stir up trouble. “We want Watkins to go back where he came from,” says Dick Hill, former Mayor of Inuvik and a federal civil servant in the north. “We want to extradite him somehow.”

The spirit of unanimity among the natives could break down when the bargaining begins in earnest because there are almost as many ideas about what a settlement should consist of as there are natives. James Wah-shee, president of the Indian Brotherhood of the Northwest Territories and himself the object of a disagreement (last month the Brotherhood’s board of directors stripped him of his powers) is not interested in the sort of settlement the Indians and Eskmos agreed to in James Bay and Alaska. (The 10,000 James Bay natives will get 5,250 square miles of land and $225 million from the Quebec and federal governments. The 60,000 Alaskans got 62,500 square miles and $962.5 million. In each case, however, the natives, in return, gave their blessing to a major development: the hydro project in James Bay, the oil pipeline across Alaska.) Wahshee doesn’t want just land: he wants power. The natives, he says, should have the power to control and even veto major developments. “The oil companies just want to make a fast buck and get out. They have no commitment to the North. They don’t give a damn. We’re certainly not going to allow them to make a mess of our communities.” If he had the power, Wah-shee would veto the Mackenzie Valley pipeline. Despite all the environmental studies ($17 million worth by the government and $14 million by Canadian Arctic Gas) and assurances that damage to the environment would be negligible, he believes a pipeline would destroy the natives’ traditional way of life. The oil companies are fond of saying that the pipeline would occupy just 40 square miles of land in the territories, or 0.003% of the total land area. But Wah-shee says that the impact on the migrating caribou, the fish and other animals that have traditionally provided food and clothing for the natives is still unknown. “What may seem to the outsider to be a vast tract of empty land is, in fact, virtually everywhere used by Indian people as they hunt, trap and fish.” It is not worth risking, he says, for a few hundred jobs, most of them not open to the natives, which is all that would remain after the pipeline is completed. “Indian people want to work, but they want to do things that give them dignity and are consistent with their traditions.”

Sam Raddi believes the government only created problems when it intruded in the North after the Second World War, setting up schools and hospitals without consulting the natives. The same mistake must not be repeated with the pipeline, he says. The natives must be consulted. “But we’re not going to try to stop anything. We know people in the south need the gas.” Raddi’s main concern is with the pace of development. He does not want to see it proceed as quickly as in neighbouring Alaska, where up to 21,500 men are working on the oil pipeline to get it finished in a hurry. They are paid up to $1,500 for a seven-day, 84hour week, and when they get some time off for “R and R” (rest and recreation), they hit towns such as Fairbanks, midway along the pipeline route, with a vengeance. The bars are open until 5 a.m. and the prostitutes, many of them native women, are more plentiful than in most big cities. Already there are disturbing signs in Inuvik, Canada’s northernmost town on the Mackenzie Delta, as men working on exploration teams for the oil companies drift in. “The guys who come up here to work are real grunts,” says one observer. “They’re brutal with the native women.” Still, says Raddi, “as long as the pipeline is controlled, we can’t be worse off than we are now.”

So the debate continues. Even families are split on the issue. Wally Firth, a Métis and NDP Member of Parliament for the Territories, is against the pipeline, but his younger brother, John, works for one of the oil companies and is all for it. The debate may be academic, however. Indian Affairs Minister Judd Buchanan says he is willing to consider almost anything in a land settlement except giving the natives a veto over the pipeline or any other major development. “No individual or group should have that power,” he says. “That is a decision for the government of Canada to make.”

To further complicate the situation, neither the Indians nor the Eskimos have yet filed their detailed land claims. The Eskimos have said they plan to file by the end of the year, but the Indians may take somewhat longer. First, they have a more complicated claim because they actually signed treaties with Ottawa in the past— one in 1899, after gold was discovered in the Yukon, and a second in 1921. after oil was discovered at Norman Wells on the Mackenzie. The government says the Indians surrendered their title to the land with these treaties. The Indians claim they were just peace treaties. The Eskimos never signed anything because until now nobody wanted their land. But the natives are in no particular hurry. “We will take our time,” says Sam Raddi. “The agreement, when it comes, will last forever."

The pro-pipeline forces, meanwhile, are doing their best to build support by predicting dire shortages of natural gas if the pipeline isn’t built soon. Canadian Arctic Gas says the shortages will start to be felt in 1980 and that the need for new supplies is so urgent and so obvious that “we have concluded there is little point in insisting further on this point.” But the oil companies have a credibility problem. Just five years ago many of the companies in the Canadian Arctic Gas consortium were saying that Canada had so much natural gas it could afford to export the equivalent of six years’ domestic supply to the United States. The government eventually approved the export of about four years’ supply. Indeed, the original argument for a Mackenzie Valley pipeline was that it would allow us to export more gas to the United States. Contracts were even drawn up between companies in the consortium and customers in the United States, contracts that have since been postponed. Now the companies say we are going to experience a shortage. The question is: are we, and, if so, how soon?

John Helliwell, a University of British Columbia economist and a tough critic of the oil industry, says we will not need Northern gas until 1987-88 at the earliest, but it is in the interests of Canadian Arctic Gas to push for an earlier decision. Fie points out that the consortium is, in effect, in competition with El Paso Natural Gas Co. of Houston, which is proposing to build a gas pipeline beside the oil pipeline across Alaska. The gas would be liquified and transported by tanker from Alaska to the “lower 48.” There is a need for the gas in the United States and U.S. politicians are unlikely to dally making a decision. The matter is now before the Federal Power Commission, theU.S.equivalent of the National Energy Board, but Congress may pass a bill approving one line or the other before the hearings are finished. Squeezing Canadian Arctic Gas from the other side is Foothills, which used to be part of the consortium but broke away last year in a fit of nationalist pique. It has scored points with nationalists for its proposed, all-Canadian route and with the natives for agreeing to wait for a settlement of land claims before building. But Vernon Horte, president of Canadian Arctic Gas, says Foothills is just delaying because there hasn’t been enough gas found yet in the Mackenzie Delta to justify an all-Canadian line. Even the most optimistic estimates put the amount of gas so far discovered in the delta at just over seven trillion cubic feet, less than five years’ supply at Canada’s current rate of consumption. Horte says at least 15 trillion cubic feet must be found before any route can be justified, and the consortium’s proposal easily meets that figure, adding to the delta gas the 24 trillion cubic feet in Prudhoe Bay. The chances of finding enough gas in the delta in the next year or two to justify an all-Canadian route are “remote,” says Horte, again making the point that if a pipeline isn’t built in the next two years Canada will face a serious shortage.

And yet even if we accept the consortium’s forecasts of shortages, it remains a fact that Canadian demand could be met simply by cutting exports to the United States. Currently, Canadian natural gas production equals about 2.65 trillion cubic feet a year, most of it in Alberta. Canadians consume only about 1.6 trillion cubic feet.The remainder is exported. The consortium, however, has a “catch-22” for people who recommend cutting off exports. Without exports, its spokesmen argue, the oil companies would lose money needed for exploration and without exploration Canada would eventually run out of gas. The government announced last summer that it intends to cut back exports after due consultation, but no cutbacks have taken place to date and one of the first tasks performed by the new energy minister. Alastair Gillespie, was to trot down to San Francisco this fall and assure the Americans that Canada takes “an especially sympathetic view” of its customers. The government is clearly concerned that Washington might retaliate if gas exports are cut off, which has prompted a bitter Eric Kierans to write: “I think of Ottawa in two ways: the capital of my country and the breeding ground of fears and haunting visions of what Washington might do.”

If it decides against cutting off or cutting back exports, the government could try to limit natural gas consumption, which has quintupled in the last 15 years. On the other hand, Helliwell argues that we can stretch out our gas supply for at least another decade, without cutting back domestic consumption or exports, by increasing the “deliverability” of the gas currently under production. Deliverability is the measure of the speed with which the gas comes out of the ground. As the amount of gas in the ground dwindles, the pressure drops, and the gas comes out more slowly. The oil companies like to illustrate the phenomenon by likening a gas well to a can of shaving cream in which the first bit of foam comes out more quickly than the last bit. But Helliwell contends that we can retrieve the gas more quickly, and thereby meet any short-term shortages, by drilling more wells. The oil companies have not met this argument head on. although they have muttered about a short supply of drilling rigs and a reluctance on the part of the Alberta government to dispense with all its gas so quickly.

No one argues that we won’t need more gas eventually, but critics skeptical of the oil companies’ dash to build a pipeline to the Mackenzie Delta speculate that if we take our time about it we might decide that some other source is more lucrative and less bothersome. Says Dalhousie law professor Ian McDougall, a longtime opponent of government energy policy: “The industry has decided the delta should be developed first. That doesn’t mean we have to agree.” One possible alternative is gas in the high Arctic islands, north of the magnetic north pole. Panarctic Oils Ltd., 45% owned by the government, has already found 12 trillion cubic feet of gas, almost twice as much as the delta has yielded so far, on Melville and King Christian Islands. Just to prove it. Panarctic president Charles Hetherington took the Commons Committee on Resources up to King Christian Island in October, turned on the gas and lit it. The MPS walked away shaking their heads in wonder and asking themselves why all the attention seems to be focused on the delta. Another consortium, calling itself Polar Gas, is studying the possibility of a pipeline to Melville and King Christian, running just west or east of Hudson Bay and avoiding the problems of the Mackenzie Valley. As an offshoot of this proposal, the delta gas could be brought due east to hook up with the Polar Gas pipeline just west of Hudson Bay. Both the government and TransCanada PipeLines Ltd. are studying this proposed hookup, which at first glance seems more attractive than the Mackenzie Valley proposals. There may be major problems as yet unforeseen, however. Hetherington himself concedes: “The lead dog’s ass is always bare.”

But whatever the route, whatever the proposal, there will be problems, economic and political. The pipeline proposed by Canadian Arctic Gas would run 2,625 miles from Prudhoe Bay and the Delta to southern Canada and the United States and cost a staggering seven billion dollars. The Polar Gas line from the Arctic islands to southern markets could span 3,200 miles and cost close to eight billion dollars. Even the shorter, 817-mile, Foothills line would cost $2.3 billion. Compare that to the $380 million it cost to build the original trans-Canada pipeline, which ran 2,290 miles from Alberta to Montreal and was completed in 1958, after a furious House of Commons debate that led to the defeat of the Liberal government of the day. Most of the capital for construction of any new pipeline would have to be borrowed abroad, causing exchange rate problems for the Canadian dollar and displacing capital for other, perhaps more worthy, projects. Any of the proposed pipelines would be so massive an undertaking that the government might have to be called in midway to bail it out. The government was drawn into the trans-Canada pipeline and. more recently, into the Syncrude tar sands project. Canadian Arctic Gas is already preparing a request for government assistance if its project runs more than $1.5 billion over its cost estimates, and negotiations are under way to bring Petro-Canada, the new federal crown corporation, into the Polar Gas project. (Ontario Energy Corporation is already in.)

All the more reason, says Helliwell, for a postponement. Then the rest of Canada could avoid “running roughshod over the very legitimate claims of the Northerners, it would be a very serious step for the Canadian government to plead national need as grounds for overriding those claims to proceed with the pipeline before the claims are settled in a generally perceived just way. To take that step on the basis of a need that is not real would be even more serious.” Adds James Wah-shee: “We know that a long and difficult struggle lies ahead, but we are resolved to get nothing less than a land settlement that assures for our people the right to live on our land to maintain and strengthen our way of life!"

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