Don’t underestimate this guy.

The federal government would be foolish to treat lightly Stephen Kakfwi’s ability to stop the planned $5-billion Mackenzie Valley pipeline – before one welder’s torch is lit.

Twenty-eight years ago, as a charismatic young Dene leader in Fort Good Hope during the Berger Inquiry, Kakfwi stood up, spoke his mind and did exactly that. Back then, he and other aboriginals believed the natural gas pipeline would bring more harm than good to their community.

Kakfwi is now premier of the N.W.T. His government might review its support for the pipeline, he told a reporter last week, if the territory doesn’t get its fair share of revenue from the mega-project.

Former Ontario premier David Peterson, Ottawa’s chief federal negotiator in devolution talks aimed at providing more resource revenue to the N.W.T., brushed off Kakfwi’s warning as a bargaining ploy.

Not smart at all.

Underestimating the other guy and misreading the “mood of the land” are what cost Peterson and his government the 1990 election in Ontario, which swept Bob Rae and the NDP into power.

Peterson and his federal handlers should take seriously a study by Kakfwi’s government that shows the Mackenzie Valley pipeline and new diamond mines could actually end up costing the territory $1.04 for every dollar of extra tax revenue from the projects.

Peterson says he will invite Kakfwi to Toronto and New York, to explain the N.W.T. and its potential.

But glad-handing with the investment crowd isn’t going to change the fact that the N.W.T. government, kept on a short leash by Ottawa, can’t even collect royalties when the territory’s own natural gas is developed.

The federal government should fix this inequity, and fast. If it doesn’t, it might end up paying employment insurance benefits to a whole lot of welders.

HORIZON SCRUTINIZED
It’s getting so crowded in the oilsands, some of the neighbours are complaining.

No surprise that the Sierra Club of Canada urged regulators at a public hearing in Fort McMurray last week to give the thumbs-down to Canadian Natural Resources Ltd.’s (CNRL) planned $8.5-billion Horizon oilsands project because it will increase the country’s
greenhouse gas emissions.

But CNRL must have been a bit taken aback when a lawyer for Deer Creek Energy Ltd. told the joint Alberta Energy and Utilities Board-federal hearing that the Horizon open-pit mine, bitumen-extraction and upgrader facility’s substantial water use may adversely affect Deer Creek’s nearby oilsands reserves.

Privately owned Deer Creek aims to go public in the third quarter next year to raise $100 million to finance a major expansion of its bitumen production.

The junior firm plans to use steam-assisted gravity drainage technology (SAGD), which involves pumping steam underground to soften the bitumen so it can be pumped to the surface.

SAGD requires a lot of water to make the steam. But H2O is becoming a scarce commodity in the Athabasca region, due to increasing demand from more than $8 billion of proposed new and expanding oilsands projects.

DEVON A PLAYER
Concerns about future water supplies weren’t enough to throw a wet blanket on Devon Energy Corp.’s announcement that it will become the first major U.S. oil and gas independent to become a player in Alberta’s oilsands.

Devon says it will file regulatory applications next month for its $500-million, 35,000 barrels-a-day Jackfish project just south of Fort McMurray.

Jackfish will also use SAGD technology.

But if any company can squeeze more bitumen out of the oilsands using less water, it should be Devon. The company’s Dover research facility near Fort McMurray boasts the longest-running SAGD project in the world.

SIBERIAN SERENADE
“Back in the U.S.S.R. . . .,” the Beatles once belted out. Today, oil and gas companies are singing: “We love you, Russia, yeah, yeah, yeah!”

Royal Dutch Shell has approved a $1-billion US development plan for the Salym group of oilfields in West Siberia. Shell will develop the oilfields, estimated to hold about 600 million barrels of reserves, in a 50-50 partnership with a Russian firm.

Shell’s move followed reports that ExxonMobil Corp. and ChevronTexaco Corp. were considering acquiring a minority stake in YUKOS-Sibneft, a merger of two Russian oil giants that will create the world’s fourth-biggest private oil producer.

The majors’ keen interest in Russia is no doubt a factor that drove the shares of PetroKazakhstan Inc. to a record last week.

Analysts also speculate that the Calgary-based company, which produces 150,000 barrels of oil a day in the former Soviet republic, may increase a share buyback, issue a special dividend or buy more property in Kazakhstan by the end of the month.

As the investment climate in Russia and other parts of the former U.S.S.R. improve, no doubt more firms will join in the verse: “Well those Ukraine wells really knock me out. They leave the West behind . . .”

MINISTRY OF TRUTH
George Orwell, who in his novel 1984 coined the term “Newspeak” for a truth-denying language laced with Big Brother propaganda, would have relished this one.

The Alberta government says it’s embarking on an aggressive strategy to move the province’s economy away from its reliance on natural resources – including oil and gas.

This is the same government that will hand out natural gas rebates this winter to each and every Albertan. People who burn more of the finite fossil fuel will get more money.

In Newspeak, that’s called energy conservation.

LONDON CALLING
A couple of junior oil and gas firms in Calgary have hit the big leagues.

Antrim Energy Inc. this summer became only the second company from outside the United Kingdom to take the speedy route to a listing on the London Stock Exchange.

Antrim’s listing was approved under the London exchange’s Alternative Investment Market, which accelerates the process by accepting documentation that has been used to fulfil requirements of other markets such as the Toronto Stock Exchange.

Blue Parrot Energy Inc. got permission this summer to trade its shares on the Third Market Segment of the Berlin Stock Exchange.

Company president Bill Elligson says the move will enhance the company’s visibility in Europe and expand its corporate presence to a broader financial community.