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Ho-ho-hold the holidays Proponents of Mackenzie gas have tight deadline to respond to 679-page report Gary Park For Petroleum News
It landed Dec. 30 with a thud on desks in the high-rise petroleum towers of downtown Calgary, spoiling whatever hopes employees working on the Mackenzie Gas Project might have had to put their feet up in front of an open fire, watch a bit of hockey and football and sip on some leftover eggnog.
Years of hearings and study, thousands of pages of testimony and regulatory filings, were distilled into 176 recommendations at a cost of about C$19 million to taxpayers by a federally-appointed Joint Review Panel, which evaluated the impact of the MGP on the environment and lives of northern residents.
Not that the document’s arrival was unanticipated, nor is the knowledge that the industry partners — Imperial Oil, Shell Canada, ConocoPhillips Canada and ExxonMobil Canada — have until only Jan. 20 to interpret the nuanced meanings of a 679-page report before submitting a response to Canada’s National Energy Board.
Imperial not commenting For now, lead partner Imperial is not prepared to comment on any of the specific recommendations.
“Given the length and detail of the report, it’s tough to comment in detail,” Imperial spokesman Pius Rolheiser told Petroleum News.
“We at Imperial will be working over hard over the next several weeks to assess in detail the impact of the (JRP’s recommended) measures on a potential project and provide comments to the NEB,” he said.
But Rolheiser did take issue with those who characterized the JRP’s conclusions as a green light for the MGP.
“It is important to bear in mind while the JRP report is a positive step, it is only one of a number of steps. The report is significant and a necessary step, but it is certainly not a green light,” he said.
Even if the NEB adds its backing to the application in September that “could theoretically give the proponents approval to build,” but neither would that amount to a green light, Rolheiser said.
However, he did concede that without NEB approval the MGP will not proceed.
Dialogue continuing In addition to the work of regulatory agencies, the MGP partners are continuing a two-year “dialogue” with the Canadian government on government fiscal terms for a pipeline, which Rolheiser would only say is “ongoing.”
Imperial is also seeking access and benefits agreements with two holdout First Nations — the Sahtu and Deh Cho — whose territories cover more than 40 percent of the total pipeline route in the Northwest Territories.
Rolheiser said the goal is to have “fully signed, ratified agreements in place” with all of the aboriginal communities before a final corporate decision is made.
For now, Imperial will not be drawn into updating the MGP’s projected cost (last formally pegged at C$16.2 billion in spring 2007), estimating how much the partners have spent on design, engineering and regulatory work (last put at about C$500 million a year ago), or, least of all, speculate on when gas might ever flow from the Mackenzie Delta, if regulators, governments and the partners do give a final “green light” (although the NEB has suggested that 2017 would be the earliest feasible startup date).
Report the immediate challenge The immediate challenge for the MGP proponents is getting to grips with a JRP report that is sweeping in its scope and consequences.
There is some comfort to be drawn from the JRP’s bottom-line conclusion that the project “if built and operated with full implementation of the panel’s recommendations, would deliver valuable and lasting overall benefits and avoid significant adverse environmental impacts.”
“The proponents’ mitigations and enhancements, the measures governments would put in place, and the panel’s recommendations would, in combination, mitigate adverse impacts, reduce the risk and enhance the opportunities.
“The panel states that these three components would provide the foundation for a durable and sustainable future in the Mackenzie Valley and the Beaufort Delta regions, adding that this future would be a better one than a future without the project.”
Key conclusions, recommendations Some of the key conclusions and recommendations in the JRP report covered:
• Future expansion of the Mackenzie Valley pipeline capacity:
The panel estimated that additional discoveries in Canada’s northern regions could see the pipeline expanded from its initial design capacity of 1.2 billion cubic feet per day to 1.8 bcf per day with the installation of 11 additional compressor stations and other facilities.
The JRP said the “common element” during its hearings was that the MGP would lead to further developments, which might “encompass the full development of a national gas exploration, development and production industry; for others, full exploitation of the oil and gas resources of the NWT, including the Beaufort Sea; and for yet others, the general industrialization of the North.”
But the JRP emphasized that moving beyond 1.2 bcf per day would require another round of regulatory review and approvals.
The current application involves a 30-inch mainline, stretching 720 miles from Inuvik into northern Alberta.
Future developments a concern The JRP noted that many of the concerns it heard related to uncertainty “about future developments that might follow” from the existing project.
• Equity impacts:
If the MGP were not to proceed, the existing disparities between regional centers and small communities in the NWT would “continue and perhaps deepen.”
By applying the JRP recommendations, the MGP might “have a mixed impact on the reduction of territorial, regional and community disparities based on proponent commitments and certain established government measures.”
• Impact on the natural environment:
The JRP said the construction and operation of a “buried non-ambient temperature gas pipeline in a permafrost environment has no direct precedent in North America.”
“It could thaw frozen ground and freeze unfrozen ground, destabilizing terrain and disrupting water courses,” posing distinctive engineering and environmental challenges.
But the JRP said it was “largely confident in the proponents’ understanding of the engineering challenges related to the project and in their design approach to addressing these challenges.”
“Even if there were to be an accident or malfunction, such as a pipeline rupture or well blow-out, the environmental impacts would likely be localized and short-lived,” the report said.
Polar bear plan • Marine and aquatic environments:
The JRP said it was concerned that expansions in throughput beyond the 830 million cubic feet per day which would flow from the three anchor fields posed an uncertain impact threat, which would increase with the pace and scale of future developments, particularly offshore.
As a result, the JRP recommended establishment of a range plan for southern Beaufort polar bears and a marine mammal protection plan.
It said no significant adverse impacts on fish and fish habitat were anticipated if the proponents’ proposed mitigation was implemented based on an agreement with Fisheries and Oceans Canada.
• Greenhouse gases:
The JRP said it was confident that commitments made by the proponents along with its own recommendations could result in further GHG reductions during the construction and operation phases.
But it noted that upstream emissions represented only a small percentage of the total life-cycle emissions, acknowledging that some participants in the hearings were concerned that Arctic gas would be used as a fuel source in the Alberta oil sands, increasing global outputs of GHGs and contributing to climate change.
“The panel is not persuaded that gas from the MGP would in fact be used in the exploitation of the oil sands. Further, the panel sees no viable way by which specific end uses could be assigned to or excluded from project gas.”
The JRP chose not to recommend that the MGP be required to offset its GHG emissions “at this stage,” although it has called for the development of national standards.
It also rejected any thought that mandating carbon neutrality or specifying preferred end uses for natural gas could be handled on a project-by-project basis.
The JRP argued that if the MGP were not to proceed it is likely that the foregone energy production “would be replaced by other energy sources to meet global demand” and there was no assurance that those sources would be less GHG-intensive than Mackenzie gas.
The panel said that for the NWT and the rest of Canada, the MGP is an opportunity and challenge to “achieve sustainability objectives associated with resource use efficiency and to enhance any future positive trends of emissions reductions directed at achieving international and national targets.”
Infrastructure long lasting • Project legacy:
The JRP believes the long-term investment in MGP infrastructure would likely last much longer than the project itself, triggering more development of gas in the Mackenzie Delta and offshore, possibly the Colville Hills area of the central NWT and the Eagle Plains and Peel Plateau areas of the Yukon.
The panel said “it is the pipeline infrastructure that holds the promise of continuing exploration and development and the possibility of sustained and durable economic activity throughout most of the project review area,” although it has called for ways to implement exploration and development “at an unrestrained pace.”
The operations phase of the MGP alone “would provide sustained benefits to the NWT for at least 20 years,” the JRP said.
• Social and cultural environment:
In the JRP’s view, if the MGP does not proceed it is “unlikely that either the conditions of social well-being or the provision of health and social services” in the project review area would improve.
It cautioned that the MGP could exacerbate current conditions without mitigation measures, but it credited the proponents with making “reasonable efforts to address these concerns.”
The JRP concluded that the MGP, over the longer run, would increase employment and personal income in the NWT and boost government revenues, contributing to personal, social and community well-being.
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