Canada's Mackenzie Valley pipe project is finally back on track
By Tim Bradner // September 23, 2007
Alaska Journal of Commerce
The Mackenzie Valley natural gas pipeline in Canada's Northwest Territories may finally be on track after delays in regulatory proceedings, the territory's industry minister told an oil and gas symposium in Anchorage on Sept. 17.
Hearings by the government's Joint Review Panel are scheduled for this fall and winter, the Hon. Brendan Bell told the conference. The schedule should put the project before Canada's National Energy Board for action in mid- to late 2008.
The biggest concerns for sponsors of the project are the escalating costs, which have jumped from an initial estimate of $7 billion to $16 billion, Bell said. Oil and gas producers backing the pipeline, which include ExxonMobil Corp. and ConocoPhillips Co., are now in Ottawa talking with Canadian federal officials about fiscal incentives for the project.
Bell was on a sales mission to the U.S., giving speeches and presentations to industry and government groups seeking to “brand” an identity of Arctic gas from both Alaska and Canada as solutions to long-term natural gas needs in North America.
He told the Alaska Oil and Gas Symposium, an annual meeting sponsored by the American Conference Institute, that both pipelines are needed to meet long-term North American gas demand. The two pipelines should be seen as complementing rather than competing against one another. Still, he cautioned that labor and materials shortages would prevent the two mega-projects from being built at the same time.
The Mackenzie pipeline has been hit by delays but could be operational in 2014, with an Alaska pipeline in operation a few years later, he told the conference.
Bell has also called for a joint Canada-U.S. federal task force to expedite Arctic gas pipelines from Canada's Mackenzie Delta and Alaska's North Slope. The proposed task force could focus on solutions to regulatory bottlenecks and other obstacles impeding the pipeline projects. This could include actions by states and provincial governments, he said
Meanwhile, lessons learned from delays and regulatory issues with the 1,100-mile Mackenzie Valley gas pipeline could ensure more timely processing of an application for a larger Alaska pipeline if one comes, Bell said.
One regulatory problem that has caused frustration in Northwest Territories, he said, is the lack of firm deadlines for proceedings by the Joint Review Panel, a group that is to hold hearings and make recommendations to the National Energy Board.
The minister said he will press for procedural changes in a regulation reform conference with federal officials planned in Vancouver, British Columbia, the week of Sept. 24.
On confidential talks on fiscal terms between Mackenzie Delta producers and the federal government, Bell said Ottawa is holding firm that the project must stand on its own economics with no subsidy.
Northwest Territories, however, is working to convince the government that federal funds should pay for basic infrastructure - such as roads, bridges and ports - that will help the project, but would also enhance long-term economic development of the region. Infrastructure costs amount to some $1 billion to $2 billion of the estimated $16 billion total cost, Bell said.
In a related development, he said a study commissioned by the Northwest Territories government and done by two consulting groups - Angevine Economic Consulting Ltd. of Calgary and Energy and Virginia-based Environmental Analysis Inc. - has concluded that if gas is not made available from the Arctic, North American consumers will shoulder an estimated $338 billion in higher costs for gas from 2014 to 2025, Bell told the conference. The study was released earlier this month.
Tim Bradner can be reached at tim.bradner@alaskajournal.com.
http://www.alaskajournal.com/stories/092307/hom_20070923020.shtml
