Tuesday April 19, 2005

The following Canadian Press news wire story appeared in a number of publications including the Edmonton Sun, Edmonton Post, Macleans.ca, Canada.com and various internet-based news services.

Lubicon oil project runs into another hurdle

by Darcy Henton

EDMONTON (CP) - A controversial heavy oil project on lands Alberta's Lubicon Lake First Nation claims as its own has run into another hurdle.

A former partner of a consortium of companies proposing a heavy oil development at Sawn Lake in north-central Alberta is asking a court to freeze the assets of several companies involved in the project and to set aside land transactions.

I.G.M. Resources Corp. filed a lawsuit March 10 against the lead company in the consortium, Deep Well Oil & Gas, Inc., as well as Classic Energy Inc., Nearshore Petroleum Corp. and 97908 Alberta Ltd., alleging that it was squeezed out of the development.

It alleges that the other partners in the Alberta numbered company improperly used confidential information, including "well data and related information relative to a well drilled by (the number company) on the Sawn Lake prospect," for their own benefit and without compensation, according to the 10-page statement of claim.

I.G.M. is seeking "compensation for unjust enrichment in the amount to be proved at the subsequent trial of this action," court documents state.

The directors of Calgary-based I.G.M. Resources are Michael B. Holley and Wayne Imes. They are also listed as the company's voting shareholders.

Both declined comment Monday.

"I don't know anything at all," said Imes. "I am just a bystander."

Holley said he would have to talk to his lawyer before discussing details of the suit.

"This will be a front-page story," he said.

It's another headache for the project. Last week, Lubicon chief Bernard Ominayak wrote a letter to federal environment minister Stephane Dion urging him to submit the Sawn Lake project for a full panel environmental assessment.

The chief said it would be irresponsible for Ottawa to let the project proceed without dealing with the unresolved Lubicon land claim and without an independent assessment of environmental, social and economic impacts of the project.

His letter was supported by environmental groups Greenpeace and the Sierra Club of Canada.

Lubicon negotiator Kevin Thomas said he wasn't sure what impact the lawsuit would have on the proposed development.

"It looks to me like this company is asking for an injunction against further development, but for their own reasons," he said. "It looks like (it's because) they have been cut out of a share of the profits, rather than because they have concerns for the Lubicon, but it would be a slowdown for them anyway."

The Lubicon made international headlines in 1988 when they blockaded roads near their community of Little Buffalo to keep out oil developers.

The small, impoverished band has been pressing for 66 years to resolve a land claim that would provide the community with a reserve, compensation and self-government.

The provincial Liberals have called for a moratorium on oil and natural gas development in the area until the land claim is settled.

A spokeswoman for Deep Well would not confirm whether the company had received the statement of claim, but requested a copy.

Deep Well CEO Steven P. Gawne, who is listed as a defendant in the lawsuit, along with his wife, Rebekah, didn't return calls.

Calls to I.G.M.'s lawyer C. Michael Smith were also not returned.

The suit also alleges that the assets of the numbered company were sold for $9 million when they were worth at least $15 million.

"The defendants have conspired, each with the other, to deprive (the numbered company) of a valuable business opportunity by entering into a sham transaction for sale of the assets and prospects to Classic at well below fair market value," the claim alleges.

Statements of claim contain allegations that have not yet been proven in court.

The suit also names Priority Exploration Ltd. and Northern Alberta Oil Ltd as well as a number of individuals, including Deep Well consultant John F. Brown, his two daughters and his wife as well as Gordon Skulmoski.

Deep Well has said it plans to drill more than 500 wells in the Peace River area. It has acquired nearly 13,000 hectares of Crown land at Sawn Lake.

It had planned to start drilling this spring, but workers clearing a lease site were ordered out by Lubicon Lake members last month.

The company boasts strong connections with the Alberta Progressive Conservative government. Former cabinet minister Horst Schmid is chairman of the board while Len Bolger, an independent director, is co-chair of the Alberta Energy Research Institute.

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