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February 2009

Vol. 14, No. 8 Week of February 22, 2009

Looks like a gas pipline

Prentice: Mackenzie has ‘never been closer’; hint of Deh Cho breakthrough

Gary Park

For Petroleum News

The Mackenzie Gas Project has received a double dose of good news, with Environment Minister Jim Prentice declaring that Canada has “never been closer” to moving ahead with the Arctic venture at the same time that a major barrier to construction of a pipeline across aboriginal land showed signs of toppling.

Increasingly upbeat about the MGP in recent weeks, Prentice told a CTV program in Canada he is confident the environmental phase will be completed late this year and the federal government is “working with the proponents to make sure we have a fiscal framework that will allow the project to proceed. I continue to be optimistic.”

In January Prentice said an offer of federal financial support had been made to the MGP proponents to support infrastructure and preconstruction costs along with unspecified incentives to share the risks and rewards.

He said the MGP is a vital part of Canada’s environmental agenda and fits in with President Barack Obama’s goal of reducing greenhouse gas emissions from coal, which accounts for about 70 percent of U.S. power generation.

However, Prentice said an Alaska gas project is lagging far behind the MGP, with environmental and other regulatory processes yet to start.

Kvisle not so optimistic

In suggesting the MGP is poised to move forward quickly once the regulatory approvals and a fiscal framework are in place, Prentice demonstrated a more optimistic mood than Hal Kvisle, chief executive officer of TransCanada, which has an option to take a 5 percent stake in a Mackenzie Valley pipeline.

Speaking at an industry conference in Houston earlier in February, Kvisle said regulatory delays that have stretched over years and added to costs have undercut the chances of a gas line from Canada’s North.

“I confess to some pessimism on the Mackenzie project,” he said. “It may well not proceed.

“I have great sympathy for the current government of Canada, which is doing everything it can to move the project forward. But it inherited a mess that’s been building up for a couple of decades.”

Hint at Deh Cho breakthrough

The other lift for the MGP came from the Deh Cho First Nations, whose land in the lower Northwest Territories covers about 40 percent of the proposed pipeline route, which said progress has been made towards a deal with the MGP consortium covering access to land and benefits arising from that access.

A proposal is being taken to the Deh Cho communities that could set the stage for an eventual ratification vote, said Ria Letcher, executive director of the Deh Cho.

The tentative hint of a breakthrough comes after years of dashed hopes and Deh Cho threats of legal action, prompting a breakaway by two of the communities (Fort Simpson and Fort Liard) to join the MGP ownership group.






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