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Mac plan under review Federal industry minister rejects any government ownership stake or subsidies Gary Park For Petroleum News
Canada’s Industry Minister Jim Prentice is promising a quick response to a financial plan for the Mackenzie Gas Project.
But beyond insisting the government has “no interest in owning any portion of the project or in subsidizing petroleum companies,” he would not disclose details of the proposal, or say whether it meets his call during the summer for the project to be “reinvented.”
Pius Rolheiser, spokesman for MGP lead partner Imperial Oil, confirmed to Petroleum News that a meeting took place with Prentice on Dec. 14 and a “proposal was put on the table.”
Other than saying there is an on-going dialogue with the government, Rolheiser said the nature of the discussions is confidential and no details will be released.
He said the partners “continue to look at options that could improve the economics” of the MGP, but for now they have no reason to publicly change the estimate of C$16.2 billion that was released in March.
Prentice said in a statement, after meeting with the MGP proponents, he believes that “with hard work on both sides, this project can be made a reality.”
“I intend to analyze and review (the latest proposal) as expeditiously as possible,” he said.
Government requirements From the government’s standpoint, he said, the MGP must:
• Satisfy the public interest tests raised in the context of the environmental assessment and regulatory processes;
• Be a private sector investment, driven by commercial considerations;
• Design and regulate the infrastructure components to maximize the potential of northern gas resources;
• Yield tangible benefits for northerners and Canadian in general; and
•Ensure participation by the Aboriginal Pipeline Group remains an important aspect.
Prentice said the government, as owner of the Mackenzie Delta gas fields that underpin the initial phase of the MGP, has a responsibility to “define the fiscal framework applicable to the project.”
He met with Imperial and TransCanada and said he would analyze the financial plan he had received “as expeditiously as possible.”
There is no indication from any of the parties whether the plan seeks government financial support in any form or whether it contains a changed ownership structure for the proposed 820-mile pipeline along the Mackenzie Valley.
Kvisle downplays media reports However, TransCanada Chief Executive Officer Hal Kvisle downplayed recent media reports that his company is on the verge of taking majority ownership of the pipeline.
He told various reporters that suggestion is “too specific” and is only one of several options being explored in an effort to improve the MGP’s economics and overcome regulatory delays.
He said TransCanada has “been very involved in developing a couple of ways that the project can move forward,” while noting that there is “no specific grand plan at this stage, no transfer of leadership in the project from Imperial to TransCanada.”
Echoing his earlier view that the MGP is in the same “nation-building” category as the Canadian Pacific railway and the original TransCanada gas pipeline, Kvisle said his own company has been “very involved” in developing ways to clear the route ahead.
He has suggested the MGP is a vital component of Canada’s future gas needs and that some federal assistance will be required.
Kvisle said TransCanada is willing to take on a larger role than its current financial backing of the Aboriginal Pipeline Group, but its overriding priority is to get the pipeline built, not to expand its own indirect stake.
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