Processing Magazine

Canada offers to back Mackenzie gas project

January 20, 2009

Canada''s federal government has offered financial support for the Mackenzie gas pipeline, a multibillion-dollar project that has been held back by regulatory delays and cost overruns, according to the Associate Press. Jim Prentice, the federal minister in charge of pipelines, would not disclose how much federal money is on the table, telling reporters that formal negotiations are still under way. The Mackenzie Gas Project is a proposed 750-mile natural gas pipeline through the Mackenzie Valley of Canada''s Northwest Territories to connect a dozen potential northern onshore gas fields with North American markets. The government offer includes a contribution to infrastructure, including barge landings and airstrips, to make the remote Arctic region more accessible, as well as pre-construction costs. Ottawa would also share "risks and returns" with the producers, though Prentice declined to say how big of an ownership stake the federal government would like in the project. The Mackenzie Gas Project is led by Imperial Oil Ltd., joined by ConocoPhillips, ExxonMobil and Shell Canada Ltd. as well as three aboriginal communities in the region. Pipeline operator TransCanada Corp. also has a stake in the project through its investment in the Aboriginal Pipeline Group. The last official estimated cost for the project was $12.8 billion in early 2007, but it is not clear how the price tag may have changed since then. Prentice met with representatives of the APG, Imperial, ConocoPhillips, Shell and MGM Energy Corp., which operates gas fields in the region. A joint review panel examining the environmental and socio-economic impacts of the pipeline said last month it would take another year to complete a long-awaited impact report -- the latest in a series of delays.