A spokesman for Imperial Oil, a major proponent of the proposed $7.5 billion Mackenzie Valley natural gas line in Canada, said Jan 9 that given regulatory demands, the project can't be completed by 2010.
“We are talking about three winter construction seasons (to build the project) ... We are at least a ways from being potentially in a position to begin construction,” said Pius J. Rolheiser, Imperial Oil's spokesman in Calgary.
The $7.5 billion price tag includes the large-diameter gas transmission pipeline to bring Mackenzie Delta natural gas to northern Alberta, plus three anchor fields in the Mackenzie Delta and the gas gathering system.
“There have been delays within the regulatory process, which we recognized from the onset would be complex and challenging, which, in turn, by delaying a potential schedule, have an impact on project costs,” Rolheiser said.
Construction of the Mackenzie gas line is considered by many to be critical to eventual construction of any gas line from Alaska's North Slope via Canada to the Midwestern United States.
Rolheiser said that Imperial, which has been promoting construction of the gas line along with ConocoPhillips, Shell Canada and Exxon Mobil Corp., was “fully committed to seeing (the process) through.”
What took proponents of the project by surprise was that the Canadian joint review panel for the project last year asked for, and received, a four-month extension, he said. “We were not surprised that the joint review panel said they needed additional days, but were surprised they couldn't be accommodated within the existing schedule,” he said.
Imperial Oil, one of Canada's largest corporations, has been a leader in Canada's petroleum industry for more than a century.
Meanwhile, officials of the Canadian Energy Pipeline Association were quoted in the Canadian press on Jan. 9 saying that the due to numerous delays and increasing costs, the proposed pipeline might not proceed in its current form. CEPA members transport 97 percent of Canada's daily crude oil and natural gas production from producing regions to markets throughout Canada and the United States.
CEPA members include TransCanada Pipelines Ltd., Enbridge Pipelines Inc., Spectra Energy Transmission West, Alliance Pipeline Ltd., Kinder Morgan Canada, TransGas Ltd., ATCO Pipelines, Trans-Northern Pipelines and Trans Quebec & Maritimes Pipeline Inc.
Pietro deBastiani, executive assistant to Brendan Bell, minister of resources, wildlife and economic development for the Northwest Territories, said earlier this week that they were optimistic that the hearings would conclude this year or in 2008. He said in due course the oil companies would have “some assurance that the project can move forward to the permitting stage.”
DeBastiani said that once the companies get regulatory approval to move to the permitting stage, they would make further decisions on the economics.
“We are very bullish on the project,” he said. “We think the North American energy market can benefit significantly. We are not seeing any showstoppers.”
Canada's National Energy Board began public hearings a year ago, concluding those hearings in December. According to Canadian press reports, however, the board was unable to assess the economics of the project without a new cost estimate.
The energy board is currently taking a recess to wait for an environmental and social impact report to be prepared by the Joint Review Panel, said Annette Bourgeois-Bent, manager of communications for the Northern Gas Project Secretariat, which assists the energy board and review panel in their efforts.
The Joint Review Panel began hearings in February 2006 and will conclude those hearings on March 20 of this year, “but we know there are topics they haven't heard evidence and submissions on yet, so, in all likelihood, they will have to add dates in April,” Bourgeois-Bent said.
Once the Joint Review Panel completes its work, its members will write a report with recommendations. The National Energy Board will then reconvene for final arguments, she said. At that point, the National Energy Board will make a decision on whether to approve the applications for construction, she said.
“If the National Energy Board did give approval for the applications, generally the approval has conditions attached. The companies would have to look at those conditions to see if economically that would work. The proponents would have the ultimate decision on whether they want to proceed or not,” she said.
Major topics of concern before the Joint Review Panel are the effects of the proposed gas line on the environment, subsistence and employment opportunities, she said. “People have spoken about their reliance on the land for food, fishing and hunting.”
There are also geotechnical, permafrost and other environmental issues. “The Joint Review Panel is committed to collecting information for providing a thorough report,” Bourgeois-Bent said.
To date, people attending the hearings have aired their concerns, but don't generally come out and say if they are for or against it, she said. “There is a broad group in the middle that hasn't explicitly said 'yea' or 'nay.'
“The panel understood it was a huge proposal and there were potential impacts on a lot of the communities,” Bourgeois-Bent said. “The hearings were very, very well attended. I don't think anyone was surprised by that.”
Margaret Bauman can be reached at
margie.bauman@alaskajournal.com.
