Canada coy on guarantees
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Northwest Territories stepping up request for Mackenzie project loan assistance
Gary Park For Petroleum News
The Canadian government is keeping tight-lipped about whether it will ever provide loan guarantees for the Mackenzie Gas Project.
Jim Prentice, the cabinet minister overseeing the project, told reporters the prospect of federal financial backing has not yet been part of the discussions with MGP proponents.
But, when pressed on the chances of Canada offering guarantees along the lines of the U.S. support for an Alaska gas pipeline, he declined to comment.
The Northwest Territories government has recently stepped up its case for loan assistance to get the stalled MGP on the move, arguing such aid might be needed to counter U.S. support for the Alaska project.
The Canadian government has submitted a fiscal package to the MGP consortium, led by Imperial Oil, although the details have been kept confidential and the proponents have yet to indicate whether the offer is acceptable.
Prentice said the current negotiations with the Mackenzie Delta gas owners (Imperial, Shell Canada, ConocoPhillips Canada and ExxonMobil Canada) and the Aboriginal Pipeline Group (which has the option of taking a one-third equity stake in the pipeline) are currently focused on support for infrastructure in the NWT, the royalty structure and pipeline tolls.
C$24 billion in guarantees NWT government sources have estimated the government might have to pledge up to C$24 billion in guarantees before the MGP can break out of its current regulatory logjam.
In a meeting with the Calgary Herald editorial board, Prentice again expressed his frustration over delays in completing the work of a Joint Review Panel, which is responsible for making recommendations on the environmental and socio-economic impact of the MGP.
“This hasn’t been Canada’s finest moment in terms of the regulatory process,” he said. “This was supposed to have taken a year and a half. It is now going into its fifth year. It was supposed to cost several million dollars and now will cost upwards of C$18 million.”
As a result, there is speculation that the cost of bringing Canadian Arctic gas to market may have climbed another C$2 billion from the most recent official estimate of C$16.2 billion.
Court fight threatened Meanwhile, two First Nations in the Yukon Territory have told proponents of the Alaska gas project that they are prepared to wage a court fight if their interests are not taken into consideration before a pipeline is built across their lands.
The White River First Nation and the Liard First Nation, unlike 11 other first nations in the Yukon, have yet to settle land claims with the Canadian government, which means they will be treated differently in negotiations with the companies involved.
But the White River and Liard leaders argue they are no less entitled to a fair deal.
Chief Liard McMillan said his first nation would prefer to negotiate rather than litigate, but that means being taken seriously by the companies to ensure “our rights and interests are protected.”
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