Amoco, settlement sign agreement

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ELIZABETH SETTLEMENT - Amoco Canada President T. Don Stacy has announced that his company will spend nearly $8 million during 1987 on further evaluation of the company's Elizabeth Settlement heavy oil lease. The spending will be in the form of a 16-well project with drilling expected to begin in July of next year. In accordance with the agreement, members of the settlement will participate in much of this work.

The co-signing of the master agreement document is unique in that never before has so comprehensive an agreement protecting the wide-ranging interests of people on a Metis settlement been concluded.

Immediately after the signing at Elizabeth Hall, 25 miles east of Grand Centre, Amoco Vice-President Sherrold Moore presented Settlements Chairman Archie Collins with a cheque for $100,000. One half of the amount goes to the Settlement association for the acquisition of lands by the settlement to replace lands which will be used by Amoco for exploration and development. The company hopes to drill approximately 500 wells on the 26-hectare settlement. Each wellsite uses between 2 - 3 acres, excluding road allowances.

The other $50,000 is payment for the establishment of a Resource Development Impact Office (RDIO). Of that sum, $25,000 was paid as a result of signing the agreement and the other $25,000 is the first installment, covering the period January 1 to December 31, 1987, of a series of annual payments of $25,000 per year lasting the lifetime of the agreement. It will assist with the expense of operating the RDIO.

Collins explained the idea of a Resource Development Impact office dealing with employment and training is still in the early planning stages. "This office will play a key role in combining the terms of the agreement to fit in with our plans for employment and training of our people. It will make sure we don't miss any opportunities for work with oil companies in the future. We'll have staff searching out contracts for us to bid on." He said out of a population of 500, there is a potential work force of 110. Seventy-five per cent of these are now unemployed.

In addition to the cheque presented Amoco deposited $195,036.59 to the Metis Betterment Trust Fund as compensation for wellsites and access roads associated with drilling activities. That funds acts as the band account for Alberta's eight Metis settlements.

Amoco's interest in developing heavy oil on settlement land goes back to 1965 when the company concluded mineral rights agreements with the provincial government. Since that time 40 evaluation wells have been drilled, most of them since 1980. Last summer drilling stopped and local contractors were laid off because of the severe drop

in crude oil prices.

Stacy said Tuesday's spending commitment comes as a direct result of the federal government's removal of the Petroleum & Gas Revenue Tax and the Alberta government's reduction of the amount of production it takes as a Crown royalty.

Amoco Public Affairs Manager Don Smith says "this agreement gives us the assurance that we can continue with our evaluation program.. What it gives the settlement is the assurance our activities will go forward with proper consideration of this settlement's concern that the work will benefit the community and its people and will have a minimal environmental impact."

Collins said "we're very satisfied with the negotiations because Amoco is recognizing have Aboriginal rights to our land here. Before, oil companies - Amoco included - would simply go to the provincal government for a permit and come here whether we liked it or not. They'd say basically 'you're on Crown lands we we can come in if we want to.' But we've been fighting to get our Aboriginal rights to this land recognized and now they've come to us with this agreement. It strikes another blow for us in our land claim and actually fortifies our position in getting the province to agree we have a justifiable claim."

Stacy indicated that while he s ncouraged by the evaluation results, Amoco was still a long way from making a decision to proceed to commercial-scale development. He cautioned the price of oil would determine the go-ahead with a commercial development that would see 10,000 barrels of crude oil per day maximum production for the life of the project. "We're hoping to see $20 per barrel (U.S.). That price would be sufficient to go ahead with a large expansion such as Esso Resources (Canada) has.

This newly announced development will be built in increments. A 16-well group will be drilled in 1987 and this will be repeated one after another until enough wells have been drilled to produce 10,000 barrels/day. Stacy assured the Settlement council that the agreement stated clearly that where possible, local contractors will be given first chance to bid on work for this development. Prior to shutdown last year, Amoco had 122 workers servicing the wells. Almost three-quarters of those were Elizabeth residents.