Mackenzie Gas Project window closing

Cost estimates and competition on the rise: Bell

Claudia Cattaneo
Financial Post
August 29, 2006

CALGARY - Time is running out to proceed with the Mackenzie Gas Project as regulatory delays boost cost estimates while competition increases from liquefied natural gas projects across North America, a senior Northern minister warned yesterday.

Brendan Bell, the Minister of Industry, Tourism and Investment of the Northwest Territories, said there is nothing that can be done at this point to address the delays because governments don't have the authority to legislate time frames.

However, he said the project can't be pushed back any longer because its window is closing.

"Everybody has got to be diligent here," Mr. Bell said in an interview after discussing the issue with provincial energy ministers meeting in Whitehorse this week.

"The federal government has offered resources to make sure that the regulatory process has the capability and the capacity to deal with this in a timely manner. Regulators need to be ready to roll up their sleeves and make sure we follow through and get this project dealt with."

A panel of regulators reviewing the pipeline from Canada's Arctic to Alberta said in July that it would take to mid-April, 2007, or five additional months, to complete its work.

The National Energy Board won't be able to rule whether the pipeline can move forward until it receives a report from the Joint Review Panel, which is assessing the project's environmental, socio-economic and cultural issues. The NEB's own review is focusing on the technical aspects, safety and economic issues.

Andrew Cameron, spokesman for the NEB, said the national regulator is independent of the JRP, which represents the Canadian Environmental Assessment Agency, the Inuvialuit Game Council and the Mackenzie Valley Impact Review Board.

"The NEB has not had any reason to alter its hearing timeline," he said. "The JRP is conducting the environmental impact assessment and contributing that important piece of work to the NEB record of evidence and the JRP has altered its hearing dates."

Still, the delay in the sparsely attended hearings has been widely criticized and has even drawn the attention of Prime Minister Stephen Harper. He said in an Aug. 28 speech in Yellowknife that the regulatory process must be allowed to run its course.

"But we should take this time to ask ourselves some hard questions, like why it takes so long to get approval for your resource projects in the North."

The 1,200 kilometre pipeline would ship up to 1.9 billion cubic feet a day of gas to southern markets from the Mackenzie Delta.

Imperial Oil Ltd., the lead partner in the project, said the delay will contribute to the project's cost escalation. Analysts said cost increases at other major oil projects suggest the price tag could have run up to $10-billion.