'Killing the pipeline' with delays

NORVAL SCOTT
Globe and Mail
December 8, 2008

'High degree of incompetence' of government-appointed joint review panel is putting Arctic jobs, exploration in jeopardy, critics say

CALGARY The fate of the $16.2-billion Mackenzie gas pipeline, which would open up Arctic gas reserves for development and provide a huge economic boost for Canada's North, is hanging by a thread as a new set of regulatory delays could mean the project never gets built.

"I'm really quite concerned," Northwest Territories Premier Floyd Roland said in an interview. "It's a delay on another delay, and we've not got a clear answer as to why. ... It's shaken the confidence of the business community."

The government-appointed joint review panel (JRP) last week said it would release its environmental impact report on the pipeline in December, 2009, instead of spring, 2009, as previously expected. While project operator Imperial Oil Ltd. hasn't yet said how the new setback could impact its construction schedule, the pipeline's expected completion date of 2014 could now be pushed back even further.

The setback is the latest in a series of unexplained delays by the JRP, which was formed in 2004 to evaluate the potential impact of the Mackenzie project. The pipeline, if constructed, would connect gas fields in the Arctic to North American markets.

The line would open up a new production region and breath life into Arctic economies.

The seven-member JRP, headed by federal civil servant Robert Hornal, was originally supposed to make its report by November, 2007, but has said it has too much information to analyze.

Stakeholders say the new delays would have an enormous effect on activity in the North, creating a loss of pipeline construction work and dissuading Arctic gas exploration.

"It's devastating. It's incomprehensible that a process like this would take so long," said Nellie Cournoyea, chairwoman of the Inuvialuit Regional Corp. "The jobs and contracting opportunities will come to a total standstill. ... Everyone is shaking their heads."

"Indirectly, they are probably killing the pipeline and the activity that is taking place in our region," she added. "There's certainly quite a high degree of incompetence in [the JRP]."

Brendan Bell, former NWT Industry Minister, said the mood in the region was one of "disappointment and outrage" and that people increasingly believe the JRP "is incapable or uninterested in ever producing a final report."

"At a time when many are crying for more infrastructure projects, this project is a natural fit [for Canada]," he said. "We need fiscal stimuli for the country, but this regulatory distress is jeopardizing the whole thing."

Imperial Oil had once planned to finish building the Mackenzie pipeline by 2009, but has been hit with a series of frustrating hurdles that have set back its plans to bring Arctic gas to North American markets. Even as the JRP process has ground on, Imperial has yet to resolve aboriginal land-access issues or the financial terms for constructing the pipeline with the government.

"The report needs to be brought to a conclusion and given to the parties so that they can get on with their side of the work," Mr. Roland said. "We need clarity from [the JRP]. This is a project that industry is willing to make a huge investment in that benefits the rest of Canada."