Photo: Sergey R

The $20 Billion Arctic Pipeline That Will Haunt Canada Forever

It’s considered the “greatest construction project” ever. Four decades on, low oil and gas prices may finally put Canada’s plans for the Mackenzie Gas Project to rest.

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Oct 9 2016, 4:00pm

Photo: Sergey R

The vision came to Jonas Antoine during a drum session with the other men of the tribe. Jonas is not a medicine man, but it was a medicine dream, of the kind that visited his Dene ancestors. He was in the village of Wrigley in a remote section of Canada's Northwest Territories, standing at the cliff on the edge of town, looking out over the massive river valley, and as he beat the hand-held drum and chanted with the men he saw something out on the horizon.

"I saw skyscrapers rise out of the ground," Antoine told me. "We're drumming, drumming, and I saw them. In the distance, rising out of our beautiful mountains. And I thought, 'This can't happen here.' I knew I had to stop it."

Antoine is seventy-five years old, has traveled the world, seen skyscrapers in the cities of North America. But he had returned to his home to be close to the land, and in the medicine dream, his people's traditional way of life suddenly felt threatened in an existential way.

"Our culture is the land. Take that away, we go away," he said.

Sitting with Antoine at his home in the bush of the interior Arctic, this skyscraper portent would probably seem outrageous. Wrigley is a tiny hamlet of a hundred souls; stand on the bluff as Antoine did and look out on the Mackenzie River valley and you can see the curvature of the earth but not another sign of human habitation. Calgary, the closest city of at least a million people, is over 900 miles away.

And yet, Antoine's fear is not completely misplaced, because the Mackenzie watershed does contain more than black spruce and caribou.

It also hides gas and oil, about 166 billion barrels of it, the third largest energy reserve in the world.

Antoine. Photo by author

In the north, near Antoine, Canada has barely begun to tap that reservoir. Only one small 40-year-old pipeline runs through a portion of the valley: south from the regional drilling and refining town of Norman Wells, past Wrigley to Fort Simpson, and then into Alberta.

Five years ago, that pipeline was leaking, at a spot just south of Antoine's home. To show me the damage, we loaded up in his battered pick-up truck and drove south on a gravel road, the only road for a hundred miles in any direction. We crossed over the Willow River on a rickety temporary bridge that seemed to have been pressed into permanent service, drove off the so-called highway and down the river bank. Antoine was wearing a Ducks Unlimited hat, stained sweat pants, bifocals, and galoshes with no socks; hardly an outfit for a long trek, but when we parked he led me into the thick forest. The mosquitoes attacked us from all sides, and Antoine lit a Player's cigarette that he pulled from a small pouch.

According to Antoine, it was Tim Lennie, the chief of the Pehdzeh Ki First Nation in Wrigley, who found the leak. "He was out duck hunting, and he smelled it, and he said 'I know that smell,'" Antoine recalled.

Read more: Why I Canoed 1,200 Miles to the Arctic Circle to Report on Climate Change

Enbridge, the company that owns the pipeline, initially told the residents of Wrigley that only four barrels of oil had leaked. In the end, Enbridge would admit 1500 barrels spilled, and paid for a large cleanup. Antoine said he appreciates that the company dug out the ground and washed their trucks to avoid introducing invasive species, but why did Enbridge feel the need to replant?

"They brought in black spruce from outside," Antoine explained. "Why? Because the paid consultants told them to. But why not let it reseed, with our own trees?" To me, the question seemed reasonable: We were in a clearing overgrown with fresh weeds, but beyond that lay nothing but millions of black spruce.

For Antoine, this relatively small leak is a cautionary tale of what is to come. The Enbridge pipeline is modest and old, a nuisance. The real threat, one worthy of a medicine dream, is the Mackenzie Gas Project, a $20 billion drilling and hydrofracking and piping plan that's been debated, without resolution, for decades.

When it involves the Gas Project, rumor is rampant, and any new construction project in the valley is seen as suspect. Ledcor, a government contractor, was in Wrigley last year to lay a brand new fiber-optic line. I mentioned that as a positive development, that high speed internet was coming to rural indigenous communities. Antoine swatted away my idea, as he did the bugs that clouded our faces.

"It's not for the communities," he said. "They don't give a damn about the communities. It's for what's to come."

"The pipeline is looming," he said.

*

The Mackenzie Valley Pipeline plan came to prominence in the midst of the 1970s oil crises. OPEC threw up an embargo, the price of crude jumped 400 percent, and the levy was dry for too many American Chevys. Suddenly, it made economic sense for the United States to start pumping oil from the North Slope of Alaska, and so America built a pipeline. Construction began in 1974 and lasted only three years, 800 miles at a cost of $8 billion, an enormous investment and achievement.

And yet, that project looked downright meager compared to plans next door. Canada knew it sat on an enormous stockpile, far more than the North Slope, and had an idea of its own to send oil and gas to its thirsty southern neighbor. The Mackenzie Valley Pipeline, later called the Mackenzie Gas Project, would snake 2400 miles across the northern Arctic shore from Alaska, through the river delta, and down the valley south to Alberta. Total cost: $10 billion CDN. The government of Canada called it "the greatest construction project, in terms of capital expenditure, ever contemplated by private enterprise."

It was a pre-existing engineering plan waiting for a crisis to make it feasible. In 1920, field crews of geologists, toting their drilling equipment in canoes, "discovered" oil deposits near Norman Wells. The strike was no surprise to the Dene First Nations who had lived in the area for millennia; their name for that bend in the river is Tłegǫ́hłı̨, "Where the Oil Is." As James Smith recounts in his 1977 book The Mackenzie River: Yesterday's Fur Frontier, Tomorrow's Energy Battleground, large scale production kicked in when the Japanese invaded the Aleutian Islands in World War II. To fuel the fight in the Pacific, Canada and America teamed up on the CANOL project, 600 miles of pumps and pipeline from Norman Wells directly west over the mountains to the coast. Across the north, airfields were laid to bring in men and equipment, and the now-famous Alaska Highway was built through the Canadian Rockies.

The CANOL pipeline pumped 4000 barrels a day between 1943 and 1945, and then it was abandoned; the roads, the pumps, the pipeline, were all simply left to rot in place. You can still find rusting jeeps out there in the boreal forest.

And yet engineers had proven an important point: such a pipeline was possible. From then on, the pace of northern development would be based on money and necessity, not the logistical challenge of working in the Arctic.

It was a pre-existing engineering plan waiting for a crisis to make it feasible.

Money and necessity: Canada had both after the 1973 OPEC oil shock. But before construction on the Mackenzie Valley Pipeline could begin, the government commissioned an inquiry to determine the environmental impact of the work. The man chosen to lead the effort was Thomas Berger, a thorough and enthusiastic young judge from British Columbia. At the time, no one could know that the Berger Inquiry, as it has come to be known, would prove a watershed.

Major public hearings were held in 1975 and 1976. Berger himself traveled to 35 communities across the Arctic and asked each First Nation what effect the pipeline would have on them. More than a thousand indigenous men and women spoke on the record, a significant percentage of the First Nations in the region; even today, less than 10,000 people call the Mackenzie Valley home. They overwhelmingly said that if the pipeline went through, it would destroy them and their way of life. But business leaders and oil company executives who also testified said that the north would be destroyed if the pipeline was not built, reduced to a permanent welfare state without jobs and investment.

An entourage of reporters followed Berger, and so the hearings were broadcast live, and translated in real time into half a dozen languages. The whole affair became a cultural event. As Alaska built a pipeline, the Canadians talked about one. And talked, and talked, and talked. Over 40,000 pages of testimony would go in the official record.

The Berger Inquiry's final report was titled "Northern Frontier, Northern Homeland." Like the American 9/11 Commission Report thirty years later, it reads more like literary nonfiction than a standard government paper. Berger quotes Alexis de Tocqueville and Wallace Stegner, and on the opening page, takes up a broad mandate: "What happens in the North…will tell us what kind of country Canada is; it will tell us what kind of people we are." It sold 10,000 copies in its first week of publication, and became a best-seller.

In a ruling that would still be considered progressive today, Berger recommended a ten-year moratorium on pipeline construction in the Mackenzie Valley while the First Nations resolved their land claims with the federal government, and that the northernmost portion of the project, the plan to pipe oil from Alaska across the ocean shore, be scrapped completely. Just off an embargo, and faced with an oil and gas shortage that could lead to war in the Middle East, Canada decided not to build the pipeline, because of the social and environmental cost to the people who lived in the north.

It was a clear environmental victory, and awakened the northern First Nations as a political force. But it also only delayed construction, ensuring the battle to build a pipeline would continue.

William Wilder sits in the empty board room of Canadian Arctic Gas Pipeline Ltd., of which he is chairman. In 1975 the company lost its battle to build a $10 billion natural gas pipeline down the Mackenzie Valley. Photo: Reg Innell/Toronto Star via Getty Images

Jonas Antoine didn't participate in the Berger Inquiry because he was living in the United States at the time. When he was a young man, he moved to America to play in a traveling rock-and-roll band. He saw the country, and then eventually settled in Sheboygan, Wisconsin, got married, became a Packers fan, and worked as stage crew at a television station and then in a factory that made plastic trays for Burger King. His children stayed in the United States when he moved back north to Denendeh, the land of the Dene.

While Antoine was gone, planning for the Mackenzie Gas Project moved ahead in fits and starts. Then, in 1994, the all-weather road paralleling the river—and eventually, as the plan goes, the pipeline—was laid in as far north as Wrigley, connecting the village to the outside world for the first time. Progress later stalled in a bureaucracy of report-issuing and payouts to local tribes, but Antoine figures that 80 percent of the pipeline prep-work has been completed.

Antoine has now taken on the mantle of environmental activist.

"'True courage rises as occasion.' That's Shakespeare, King John," he said, by way of explanation.

Antoine's plan, with other members of his nation, is to focus on protecting the most sensitive environmental areas from the path of any future pipeline. For example, he was particularly concerned about turbine-powered pumps near the swamps where caribou breed.

But there are hazards to this strategy.

"You have to assess the area to protect," he said. "A complete assessment, and that includes a mineral assessment." The Northwest Territories is rich in diamonds, radium, uranium, and coal; bringing undue attention to such a spot can backfire, according to Antoine, because then resource-extraction companies seek to lay a claim. So there are other ways to defend a place and delay construction.

Read more: The People Making Solar Power Where the Sun Doesn't Set

"We can get huge chunks of money from the federal government for water conferences, so we do that," he said.

"But does it help anything? Does anything get done?" I asked. I admit, I was suspicious.

"Slowly," he said, noting that the tribe has spent a lot of money on lawyers. When the movement got started, Antoine told me "The elders came to us. 'We are your lawyers,' they said. That would have been better." It was a sentiment I had heard before, from Slavey elders at the annual Dehcho assembly in Jean Marie River a week before, that the nation should have relied more on its own wisdom than expensive consultants. Over the decades, suspicion has only grown about the deals struck by these consultants to gain the nation's cooperation in the pipeline construction.

"The companies come in and announce a $500 million project," he said. "They want people to think that will be the investment in the community. But the only investment is jobs as dishwashers."

When Antoine worked at the plastic tray factory, he said he learned a valuable lesson. The company made the trays as thin as possible, so they would break when dropped from waist height. That way, they could sell Burger King more trays. How would a pipeline company similarly maximize their profit?

"I realized, everyone has their business," he said. "And for me, and our nation, our business is taking care of our people."

Rust black piping stacked in Canadian shipping yard. Photo: Shutterstock

Not everyone who lives in the Mackenzie valley thinks the pipeline is an inevitability.

Several companies—including Northern Transportation Company, the 82 year-old barge and shipping corporation—are on the verge of bankruptcy waiting for the work to start. The local airline, North Wright, bought new planes in anticipation of construction-related demand that never came. The prime contractors have changed several times over, and the Canadian government has given extensions to work permits waiting for the price of oil and gas to go up.

In Tulita, a small town north of Wrigley, I met Wendy and Ron Oe. They are Pentecostal missionaries originally from Alberta, a province that, until last year's dramatic election, was often called the Texas of Canada: conservative politics and lots of oil. Growing up among rigs and refineries, they know what a boom looks like, and don't see it in the Northwest Territories.

"Every few years they drill a well here, a well there. They investigate, decide it's too expensive, and go home," said Wendy, referencing the shale exploration that began in 2011 but was quickly abandoned.

Ron was more succinct. "If they were going to do it, they would have done it," he said. There was exasperation in his voice, because he wasn't just talking about the pipeline. He was talking about the road too. The gravel highway that I drove on with Jonas Antoine stops at Wrigley, and the villages of Tulita, Norman Wells, and Fort Good Hope are stranded.

The Oes do odd jobs around town to make ends meet. Wendy hosts a bed and breakfast, Ron is a small engine mechanic and runs ground control at the local airstrip. The lack of an all-weather road turns their otherwise middle-class lifestyle on its head; once a year, when the snow-paved winter road opens, they drive south for a week-long shopping spree, buying all the clothing, electronics, home improvement supplies, and frozen food they'll need for the next year.

For many in Tulita, Norman Wells, and Fort Good Hope, this lack of an all-weather road is both a source of frustration and a piece of evidence that the pipeline is never coming. The two are perpetually linked: A July editorial in News/North, a paper based in the territorial (and highway accessible) capital of Yellowknife, recommended that any infrastructure work that would support a future Mackenzie Gas Project, such as the road to Tulita, should be moved to the bottom of the government's priority list, as the likelihood of the project happening is so small.

Or, as the Oes would say, how can they build a massive pipeline if they can't even build a road?

The News/North editorial notes that the Northwest Territories government is nearly bankrupt, with only a diamond mine keeping the economy afloat. Public policy experts at the University of Calgary advocate expanding Canada's existing infrastructure corridor system to include the north. The corridors are zones of environmental clearance, a five-kilometer wide tube through which could pass pipelines, highways, fiber-optic lines, railways, electricity. One route, predictably, would follow the Mackenzie River valley. Theoretically, this reduces the cost of projects that would utilize the corridor, increasingly the likelihood that private investment will take place.

The latest estimates place the cost of the Mackenzie Gas Project at $20 billion CDN, or approximately $16 billion US. In some ways, however, the cost of the Mackenzie project has gone down, falling by half in relative terms. The original price tag, $10 billion CDN in 1975, would be nearly $45 billion CDN in 2016 dollars. For comparison, the enormous (and currently stalled) Keystone XL Pipeline costs estimates are only in the $5-$8 billion US range.

In June, the National Energy Board of Canada approved an extension of construction permits originally granted in 2011. The consortium of energy companies—Imperial Oil, Shell, ExxonMobil and ConocoPhillips—now has until December of 2022 to build the pipeline.

I reached out to all four companies, and only Imperial Oil responded to a request for comment. "This extension will allow time to assess whether changes in the North American natural gas market. . . will result in improved economics for development of Mackenzie Delta gas reserves," a spokesperson said in a written statement. "The project participants remain hopeful that they can assist in the development of Canada's significant northern gas resources."

*

The last place I expected to see a major construction site was in the furthest reaches of the Mackenzie Delta, twenty miles shy of the Arctic Ocean.

And yet, there they were, a fleet of graders and bulldozers and dump trucks, laboring through the mounded silt on one of the delta's countless unnamed islands.

I was four days out from Inuvik, the last town on the river, making a final push to land's end after canoeing the entire length of the Mackenzie, over 1,100 miles, to report on climate change. Every sign of civilization was behind me: no more fish camps, no more buoys or channel markers, no more barges or power boats. I was even off the charter plane flight path. The far edge of civilization, the Arctic Ocean, was only a dozen miles away.

But as I rounded a bend on a shallow meandering channel, I was surprised by a flashing light at the top of a slight ridge. It caught my eye, so regular and hypnotic; at first I thought it was a safety beacon on a tower. Instead, it turned out to be the sunlight glinting off a backhoe's arm, digging in the ground in a steady rhythm. It was surrounded by other equipment, and a barge with a massive structure on the deck—a building with a peaked roof and rows of windows that looked for all the world like a suburban hotel—was docked in the river next to an earthwork ramp.

Considering the pipeline delays and the state of the local economy, I assumed the construction must be military related. The refurbishment of an old Cold War radar station. Or maybe an upgraded airfield. Some new facility to counter Russian expansion in the Arctic. I didn't paddle too close, and tried to be discreet taking photos.

But I was wrong. A few days later, Gerry Kisoun, the owner of a small charter boat company in Inuvik, told me the workers weren't doing construction so much as reclamation. It was an old oil drilling site, left over from the pre-Berger Inquiry days, and it was finally getting cleaned up.

"The trappers up here, they could make good money," Kisoun told me. "And then the oil companies came and just started drilling, dropping dynamite into the lakes, scaring everything away. And the trappers went to our tribal leaders, and said you have to do something about this."

When the Berger Inquiry issued its report, such wildcat drilling stopped, but it took decades for the site to be reclaimed.

Like the Oes, Kisoun doesn't believe a pipeline will be constructed any time soon. "I honestly don't think it will happen in my lifetime. The price of oil is too low," he said. And yet, if the price does rebound, Kisoun is willing to have an open mind about development.

"Our leaders are saying, we're ready to do business. There's a way to do it safely now, but we have to protect all this," he said, gesturing to the Mackenzie delta outside the window of his power boat. "We don't want another Gulf of Mexico."

The First Nations find themselves in an awkward spot. Since the Berger Inquiry, most groups have settled their land claims, and thus now own enough oil and gas to roast the planet a second time over. In 2000, the Aboriginal Pipeline Group was formed and took a one-third stake in the Mackenzie Gas Project, so the Dene, Gwitch'in, and Inuvialuit would get a portion of profits. This places them in the position of both victim of climate change and potential perpetrator. In a classic catch-22, the money to pay for helping their people mitigate the effects of warming in the north may well come from producing and burning yet more oil and gas.

"I sleep next to the pipeline, my pillow rests right on top of it, but I have to drive two hours to get gas."

Unsurprisingly, then, tribal leaders are divided on the issue. Earlier this year, the Gwitch'in Tribal Council voted to ban hyrdrofracking in their region of the Northwest Territories. And yet at the same time, the Aboriginal Pipeline Group has expressed frustration that its oil company partners aren't serious about the pipeline and aren't moving fast enough.

In 1977, Berger enclosed a letter to the House of Commons with his report, and it concludes this way: "With time, it may, after all, be possible to reconcile the urgent claims of northern native people with the future requirements of all Canadians for gas and oil." That has not happened yet, over the last forty years. Will it happen in the next forty?

Pipeline construction. Photo: Sergey R

Alternative strategies abound to access the oil and gas or to work around the existing Mackenzie Gas Project plans. In a surprise move, the pipeline-friendly Liberal federal government just approved a massive liquid natural gas project in British Columbia. One businessman is calling for a similar, though much smaller scale, refinery in the Northwest Territories, so at least the local towns can produce gas for themselves. Fuel is extremely expensive in the north, about $8/gallon CDN when I was in Inuvik in July. Jonas Antoine expressed a sentiment I heard all over the Mackenzie valley: "I sleep next to the pipeline, my pillow rests right on top of it, but I have to drive two hours to get gas." If the First Nations have to live with the consequences of an eventual pipeline, they want the conveniences too, including a low price for fuel.

Other plans call for reversing the flow of the gas project. In late June, a judge in BC halted the controversial "Northern Gateway" pipeline project—a corridor to link Alberta with the Pacific, it would have run across the northern portion of the providence—ruling that the local First Nations were not sufficiently consulted on the plan. With the American Keystone XL pipeline also halted, Alberta has to rely on so-called "bomb trains" to export its energy reserves. But if a deepwater port were built at Tuktoyaktuk, on the Arctic Ocean coast, then the Mackenzie valley could be used to pump Albertan energy to tankers bound for Chinese markets.

This is no napkin-sketch idea. Bob McLeod, the premier of the Northwest Territories, calls it the "Arctic Gateway," and has been pitching it for several years.

After four decades of talk, the pipeline really is still looming for Jonas Antoine. As we wrapped up our time together, I asked him whether there was anything the pipeline companies could do to move the project forward. Or would he always be set against it?

"First, there must be consultation," he said, using the buzzword that canceled the Northern Gateway project in BC. "Real consultation. Consultation today is they come tell you what they done to you."

Antoine wants a seat at the table, a chance to steer the pipeline away from hunting and fishing grounds, to protect water and the land.

"Ok, real consultation," I said. "What else?"

"Three things," he said, and ticked them off on his fingers. "Consultation, consent, and compensation."

Antoine's business is taking care of his people.

@Brian_Castner

Travel support for this story was provided by the Pulitzer Center on Crisis Reporting

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