[R-G] Imperial Oil [Exxon-Mobil] begging Ottawa for MGP concessions; Reply
mstainsby at resist.ca
Fri Sep 30 11:19:32 MDT 2005
*Imperial Oil seeks more aid for Mackenzie pipeline*
Industry source says federal government officials are shocked at the
By DAVE EBNER
Thursday, September 29, 2005 Page B3
CALGARY -- *Imperial Oil Ltd.* is pressing Ottawa for more financial
incentives on the proposed $7-billion Mackenzie Valley pipeline, a push
happening even after the government said in the summer it is willing to
pony up $500-million to get the stalled project moving.
Imperial, majority owned by the world's biggest public oil company, Exxon
Mobil Corp. of Irving, Tex., wants breaks on matters such as royalty
payments. They are "things that recognize the risk of this project," Paul
Smith, a senior vice-president at Imperial, said in a recent interview.
But one industry source said that federal government officials are
shocked at the demands. "The ask was significant," said a senior
pipeline industry executive. "Folks in Ottawa cannot believe the balls on
Exxon, especially in this high-price environment. Exxon went in with the
ask because their whole project proposal is based on something in the
neighbourhood of $2.50 (U.S.) gas, and they're absolutely refusing to
budge from that presumption."
The price of natural gas had averaged about $6 for a thousand cubic feet
in recent years, triple the $2 average of the 1990s. The price has soared
since hurricane Katrina. Yesterday it jumped $1.25 or 9.9 per cent to a
record close of $13.91 on fears of another hurricane.
Toronto-based Imperial is mum on the talks. "I wouldn't want to pre-empt
what's going on," said spokesman Pius Rolheiser. "Those are confidential
discussions." He said any projections Imperial has are private, and that
his company -- the leading proponent of the pipeline -- doesn't even
share its outlook with ConocoPhillips Canada and Shell Canada Ltd., which
are part of the pipeline consortium and have their own numbers.
At an Insight Information Co. conference in Calgary yesterday, Premier
Joe Handley of the Northwest Territories said the Mackenzie Valley
pipeline will generate more than $50-billion (Canadian) in cumulative
revenue, with natural gas at $4 (U.S.).
"Asking for fiscal breaks when natural gas is at $13, it's a tough sell,"
Mr. Handley said.
Ottawa has been asked by Imperial for "various proposals and
enhancements in and around tax treatment and investments," said Alex
Swann, a spokesman for Deputy Prime Minister Anne McLellan.
Ottawa in July promised $500-million (Canadian) to northern communities
to address social and economic issues.
In April, Imperial halted most work on the pipeline, in part blaming what
it called unreasonable demands from northerners for access to their land.
Land access negotiations have improved. Imperial still wants to settle
the issue with one-time payments, while northerners, including Mr.
Handley, insist that some sort of annual payments are necessary.
Public hearings on the pipeline won't begin until January at the
earliest. Imperial in November plans to say whether it is ready, and the
National Energy Board then needs two months to organize everything.
and a response in the Sierra Club's Press Release today
Increasing Subsidies to Imperial Oil: No way to fight climate change or
Ottawa--Imperial Oil's brazen demand for $2 billion in loans and
reductions to royalties to finance the Mackenzie Gas Project must be
categorically rejected by the federal Cabinet says the Sierra Club of
"This $2 billion is a gift from Canadian taxpayers to the U.S. oil
industry and American motorists given that Mackenzie gas is destined to
fuel production of tar sands oil for export" says Stephen Hazell SCC's
conservation director. "The federal government should focus instead on
investing in energy efficiency and alternatives to fossil fuels. This is
the way to meet our Kyoto Protocol commitments and provide relief to
consumers and small businesses from higher gasoline, heating oil and
natural gas prices."
"Let's remember that Imperial Oil, ExxonMobil (Imperial Oil's U.S. parent
corporation), Shell and ConocoPhillips (the MGP partners) are fabulously
profitable as a result of high oil and natural gas prices. Imperial's net
income was $539 million in the second quarter of 2005, while Shell Canada
Ltd. had a net income of $526 million in the second quarter. Meanwhile
low-income Canadians are facing catastrophic
increases in the costs of heating their homes this winter, and many
businesses that rely heavily on fossil fuels may go bankrupt" he says.
In addition to the $1.4 billion in annual federal subsidies received by
the oil industry generally, recent federal subsidies related to the
Mackenzie Gas Project include:
$500 million to address socio-economic impacts on indigenous
communities related to the planning and construction of the
Mackenzie Gas Project;
$75 million to increase government capacity to review the MGP; and
$21 million for the Dehcho First Nations for economic development
and participation in the MGP review.
Hazell appeared before the House of Commons Standing Committee on
Industry, Natural Resources, Science and Technology recommending cuts to
the $1.4 billion in federal subsidies and that resulting savings be used
to ramp up federal programs to improve the energy efficiency of Canadian
homes and businesses.
"This additional $2 billion subsidy would lead to destruction of
globally significant intact boreal forest teeming with caribou, moose,
geese, wolves and bears in the valley of the Mackenzie--Canada's wildest
big river." says Hazell. "The MGP--the largest industrial project ever in
Canada's north--means transformation of that wilderness to a
petro-industrial landscape within a generation."
Mackenzie gas is intended to fuel the planned five-fold expansion of oil
production from Alberta tar sands by 2030. The 1.5 billion cubic feet per
day of Mackenzie gas is crucial to fueling extraction of bitumen from the
tar sands as well as providing hydrogen to upgrade the bitumen. Tar sands
mining produces roughly twice as much greenhouse gases per barrel of oil
as conventionally produced oil, destroys boreal forest and wetlands, and
produces massive tailings, air and water pollution. Sierra Club of Canada
is asking Canadians and Americans to sign the Mackenzie WILD Declaration
in order to constrain the unsustainable growth of the tar sands industry
as well as protect Mackenzie Valley wilderness. Read more about the
Mackenzie WILD campaign at www.mackenzieWILD.ca
Contact: Stephen Hazell, 613 241-4611 or shazell at sierraclub.ca or Katie
Albright katie at sierraclub.ca
In the contradiction lies the hope.
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