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Vol. 10, No. 9 Week of February 27, 2005
Providing coverage of Alaska and northern Canada's oil and gas industry

‘Strike while the iron is hot’

NWT minister adds to call for urgency in moving Mackenzie gas pipeline through regulatory phase; if Alaska gasline gets ahead ‘we’re in trouble’

Gary Park

Petroleum News Calgary Correspondent

As the regulatory potholes and speed bumps start to accumulate on the road to the Mackenzie Gas Project, so do the voices of concern, with Northwest Territories Resources Minister Brendan Bell joining the chorus.

More than anything, the quickening pace of the Alaska gas pipeline project along with delays in the Mackenzie process put development of Canada’s Arctic gas resources at risk, he told reporters in Calgary Feb. 18.

For now, he said the Mackenzie economics are “right … but we must strike while the iron is hot.”

However, if Alaska moves ahead of the Mackenzie line “we’re in trouble” because of the demands on construction labor and materials, he said, warning that under those circumstances the Mackenzie start-up timetable could be stalled for at least a decade to about 2020.

Bell said both Arctic projects are advancing, but suggested that Alaska might have taken an edge in momentum.

The gap closed earlier in February when the U.S. Federal Energy Regulatory Commission approved “landmark rules” to facilitate approvals and financing of the Alaska pipeline, with FERC chairman Pat Wood rating Alaska gas as vital if the U.S. is to have affordable energy 10 years from now.

Consortium sticking with 2009

Hart Searle, a spokesman for Imperial Oil, the lead partner in the Mackenzie project, said the consortium is sticking with the “broad outline” of its targeted 2009 in-service date.

But he said the “gathering momentum” in Alaska could challenge the Mackenzie plan, whose economics are “not that robust.”

Bell made his comments are a meeting of energy ministers from the Northwest Territories, Yukon, Nunavut, Alberta, British Columbia, Saskatchewan and Manitoba, who are developing a strategy to promote their region as a strong and secure source of supplies — a message Bell said is “very important” to get across in the United States.

Because of worries that Alaska could derail the Mackenzie project “we need good communication in Washington.”

Troubled by a feeling of foot-dragging in the Canadian government, the ministers have set themselves a goal of getting “ahead of (federal) policy making,” and are lobbying for streamlining of regulatory processes for major undertakings such as the Mackenzie pipeline.

Although most observers doubt an Alaska pipeline could be completed much before 2013-2015, Bell suggested the emergence of liquefied natural gas and other technologies influencing the gas market could undermine the Mackenzie plans, which are being slowed by community leaders in the Northwest Territories.

First Nations issues not deal breaker

But Bell does not see the legal action by the Deh Cho First Nations, who want a resolution of their land and self-government claims with the Canadian government before they will allow a pipeline to cross their land, as a deal breaker.

He said the Deh Cho support the pipeline and only want to “work through” some conditions with the federal government.

However, Stephen Kakfwi, who retired last year as Northwest Territories premier and is now working with communities along the pipeline route, said Feb. 20 those communities are not getting the money or the expertise required to fully assess the pipeline’s impact.

He also accused Imperial Oil of not being “very community sensitive” and failing to properly answer community questions.

Kakfwi, a key aboriginal leader in the 1970s in blocking the first attempt to develop Mackenzie Delta gas, was a vigorous supporter of reviving the project during his time as premier.

He now says the regulatory process is “sad and absurd” and needs change.

Non-governmental organizations initially received just over C$1 million to participate in technical hearings — only one-tenth of what they had requested — which groups such as the Canadian Arctic Resources Committee said in December was inadequate to do a proper job of participation.

In the meantime, money has been distributed from a C$4 million fund created by the Northwest Territories and Canadian governments and the Mackenzie partners.

Aboriginal groups and tax-based communities are using the money to negotiate land access and benefits agreements with the Mackenzie proponents under what is called the Resource Pre-Development Program that is earmarked to ensure roads, water systems and waste management systems are in advance of the pipeline.

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