Mackenzie gas a ‘critical first step’

Northwest Territories minister tells Alaska symposium opportunity to build natural gas pipeline by 2015 is Canada’s “to lose”

Gary Park

For Petroleum News

The Northwest Territories had one clear message for Alaska this week – Arctic natural gas on both sides of the border could deliver 8 billion cubic feet per day to southern markets, representing a “real and viable solution” to the common challenges of rising energy costs and climate change.

But in outlining that argument at the 4th annual Alaska Oil and Gas Symposium in Anchorage Sept. 24, Northwest Territories Industry Minister Bob McLeod again hammered home the point that although the proposed Mackenzie Gas Project and the Alaska Gas Pipeline are two parts of a “single-minded objective (to) secure stable energy supply,” the Mackenzie line must come first.

He said the Canadian project is a “critical first step” in the development of North America’s Arctic natural gas, but told Petroleum News that the opportunity is Canada’s “to lose” unless the remaining regulatory, fiscal and aboriginal issues are disposed of following the Canadian federal election Oct. 14.

McLeod also said he remains confident that the Mackenzie project, despite the slow-moving decision-making process, could be up and running by 2015, three years before the earliest target for commercial development of Arctic gas.

For northerners, delivering Arctic gas to southern markets is the single-most important contribution they can make to promote the use of cleaner-burning fuels, McLeod said. He said there is an opportunity for Alaska to build on the work done so far in the Northwest Territories, emphasizing “these two mega projects must be coordinated to ensure required labor and resource demands can be met.

“For proponents of the Alaska pipeline, the intense regulatory scrutiny of our project will provide a model to follow,” McLeod said.

Despite Canadian Prime Minister Stephen Harper’s recent assertion that the MGP could move ahead in the “not-too-distant future,” the Northwest Territories government “just wants to see those words translated into action,” McLeod said.

To that end, he said the inclusion of Alaska Gov. Sarah Palin on Sen. John McCain’s ticket “should serve as a wake-up call” in Canada, given Palin’s bold moves to accelerate development of an Alaska pipeline.

“In my view, the Mackenzie project is of critical importance and must go forward first,” he said. “The sense I am getting in Alaska is that Americans are realizing how important their pipeline is.”

However, the Canadian regulatory process is “moving a lot slower than we would like,” he conceded.

And though there have been indications that talks between the MGP co-venturers and the federal government on fiscal terms have been making headway, the five-week federal campaign has frozen those negotiations.

In his speech to the symposium, McLeod said that if a pipeline is built along the Mackenzie Valley “it will be the first secure link to a solution” in North America to overcome the disconnect between energy demand and supply.

He said the two pipelines also could provide an answer to the rising output of greenhouse gas emissions, noting that a report by Virginia-based Energy & Environmental Analysis Inc., commissioned last year by the Northwest Territories government, projected that without Arctic gas the use of coal for electricity generation in the United States would increase carbon emissions by 258 million tons from 2014 to 2025.

The report estimated that the introduction of gas from the Mackenzie Delta, Prudhoe Bay, Russia and Norway could save U.S. consumers $300 million over the same period.

Putting Arctic gas in a wider context, he said the “sad reality is that even if the Northwest Territories were to eliminate all of its greenhouse gas emissions, a handful of coal-fired electricity plants in China would almost immediately replace our production.”