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Vol. 15, No. 41 Week of October 10, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Mackenzie gas jitters

Support agencies winding down; truce reached between government, review panel

Gary Park

For Petroleum News

So fragile is the state of Canada’s Mackenzie Gas Project that related activities are carefully parsed for any deeper meaning.

Thus, a decision to close two Canadian government offices in the Northwest Territories, along with the latest delay in the National Energy Board’s final decision on the MGP application have become yet more ammunition for those who think the project is moribund.

The government has closed the Yellowknife-based office of its Northern Gas Project Secretariat, along with satellite offices in Inuvik, Norman Wells and Fort Simpson, and is about to shut down the Mackenzie Gas Project Office, which is separate from the MGP offices run by Imperial Oil, the lead partner in the MGP consortium.

The NGPS, which was established seven years ago, had already declined to seven employees in Yellowknife and Ottawa from 19 initially, while the MGPO was established under Environment Canada two years ago.

The NGPS was primarily a communications vehicle, created by the boards and agencies that had the job of assessing and reviewing the MGP and helping people understand more about the MGP and how they could participate in the process.

It also supported and helped coordinate public hearings in various northern communities over two years.

The MGPO was responsible for overseeing, coordinating and resolving issues related to all federal department activities connected to the MGP and played the lead role in federal interactions with the Northwest Territories and Alberta governments and the project proponents.

Its latest function has been to lead development of the federal response to the Joint Review Panel report on the environmental and socioeconomic impacts of the MGP as well as reviewing the fiscal framework that will apply to the MGP, to ensure an “effective, efficient, timely and accountable regulatory regime is in place” should the MGP proceed and coordinating federal consultations with aboriginal groups.

A spokesman for Alternatives North, a Yellowknife-based social justice organization, told Northern News Service the fact the federal funding has been withdrawn from the NGPS was evidence that the federal government no longer believes the MGP will move ahead.

While the work of both agencies has been winding down, Imperial has indicated that even if the MGP proceeds, gas from the Mackenzie Delta would be unlikely to start flowing to market before 2018.

A spokesman for Environment Canada said that since the MGP is not in a position to start applying for permits, federal involvement is being scaled back.

Glimmer of hope

Amid this downturn, there has been one glimmer of hope that there could be an end to regulatory squabbling involving the Canadian and NWT governments and the JRP.

In an agreement that could rescue the MGP from its latest bog, the JRP will proceed with its review of the Canadian government’s interim response to the JRP’s own report, so that the government can post its full comments by Oct. 12.

The government, in turn, will consider the comments and make changes to the interim government response where appropriate.

Once the two levels of government have approved their final response it will be made public.

The NEB has said that once it receives the government’s final report it should take about a month to deliver a final verdict on the MGP application.

The NEB has the job of incorporating the JRP’s findings and the government’s response to them in its final verdict. The government can then accept, reject or modify those recommendations.

The JRP had previously refused to participate in the so-called “consult-to-modify” process that is the basis of the government’s final response to the panel because Ottawa had demanded that its full report remain confidential.

Meanwhile, Alberta Energy Minister Ron Liepert is suggesting that the MGP will now fall behind any natural gas pipeline from Alaska to the Lower 48, partly because the MGP has been sidetracked by environmental and First Nations issues.

As a result, he said Alberta government officials and most of the industry have turned their attention to an Alaska project.

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