Mackenzie Gas Project report on its way

Gary Park

For Petroleum News

Backers of the Mackenzie Gas Project have a date — Dec. 31.

That’s when the Joint Review Panel is expected to meet its promised deadline and deliver its findings on environmental and socioeconomic issues, Northwest Territories Industry Minister Bob McLeod told reporters in Calgary Dec. 15.

“My expectation is that it will be a positive report,” he said, insisting northern gas still has a place in the North American market, despite the surge of competition from shale gas and technological advances in the extraction of gas from fields closer to markets.

If McLeod’s prediction is accurate, that would be the first positive development in a long time for the plans to deliver up to 1.9 billion cubic feet per day of Mackenzie Delta gas to southern markets.

However, the actual date has yet to be confirmed. Brian Chambers, executive director of the federal government’s Northern Gas Project Secretariat, said the review panel will set the release date.

The MGP is “still a high priority for our government and we want to make sure that everybody in Canada and particularly (in the federal government) understands that this project is in the national interest,” McLeod said.

He said it is equally important for all Canadians to appreciate that the benefits of Arctic gas development will extend far beyond the NWT, with the “main beneficiaries” being in Alberta, Ontario and Quebec.

He estimated the MGP could generate C$10 billion in federal tax revenues and boost the Gross Domestic Product of Alberta by C$9 billion and Ontario by C$5.5 billion.

McLeod said he does not expect the Canadian government to disclose the financial packages offered to the MGP partners before the review panel issues its recommendations.

But he said a fiscal deal must be reached by Ottawa and the MGP consortium, led by Imperial Oil, before Canada’s National Energy Board starts its final hearings in April.

The panel is anywhere from two to four years behind its anticipated schedule when it embarked on hearings in summer 2004 and millions of dollars over budget.

Those delays have seen the rapid emergence of shale gas raise questions about the need for Arctic gas development in both the NWT and Alaska.

Chris Theal, an analyst with Macquarie Research, is one of many observers who argue that Arctic pipelines can’t compete with shale gas, suggesting that ExxonMobil’s bid to acquire XTO Energy has added at least five years to Arctic gas development.

He predicted Imperial will seek final approvals so that it is positioned to move ahead when the gas is needed.

Michael Sloan, senior project manager for consultant ICF International, said his firm no longer includes Mackenzie gas in its supply mix “given what’s happened to shale gas supplies.”