Another delay has been heaped on the Mackenzie Gas Project, but the impact on the venture is not yet clear.
Federal Court Judge Michael Phelan ruled that the Joint Review Panel assessing the project’s social and environmental impacts cannot file its final reported to the National Energy Board until it consults with the Dene Tha aboriginal community in northwestern Alberta.
He concluded that several federal cabinet ministers “breached their duty to consult the Dene Tha” in creating the regulatory and environmental review process.
The proposed Mackenzie Valley pipeline covering more than 700 miles down the Northwest Territories would extend 50 feet into Alberta before connecting with the existing gas pipeline network in the province.
But the Dene Tha, representing 2,500 residents, have argued that their traditional lands reach into the Northwest Territories and that any connecting Mackenzie facilities are integral to the pipeline and must be part of the federal review.
Phelan said the court will hold a remedies hearing after listening to the affected parties about what should be discussed.
His ruling said the issues will include whether the Canadian government should be required to appoint a “chief consulting officer” to work with the Dene Tha.
But Phelan did concede that consultation poses a challenge given that the review panel has been holding hearings for 10 months.
He wrote that “to some extent ‘the ship has left the dock.’”
“How does one consult with respect to a process which is already operating?
“The prospect of starting afresh is daunting and could be ordered if necessary. The necessity of doing so in order to fashion a just remedy is not immediately obvious,” Phelan said.
“However, it is not immediately obvious how consultation could lead to a meaningful result,” he said.
Phelan said the Dene Tha have a constitutional right to be “at the very least informed of the decisions being made and provided with an opportunity to have its opinions heard and seriously considered by those with decision-making authority. The Dene Tha were never given this opportunity.”
Dene Tha ‘thrilled’ with decision
Dene Tha lawyer Bob Freeman, with the Victoria firm of Cook Roberts, said his clients are “thrilled with this decision and very much hope that it will press the federal government to sit down and work with us, which is what we’ve been pushing for all along” He described a “remedies hearing” as unusual, but expects it will occur fairly soon.
Freeman interpreted the ruling as allowing the review panel to continue its work with communities along the pipeline right of way in the Northwest Territories, but “anything that could relate to the Dene Tha must stop.”
Dene Tha Chief James Ahnassay said he hopes the government will “now give us meaningful participation.”
A spokesman for the Canadian Environment Assessment Agency, which oversees the review panel, said the government could appeal Phelan’s decision, but gave no indication whether that is likely.
The review panel had already extended the deadline for completion of its work from late this year until April 2007, although there is no fixed date for the panel to deliver its findings to the National Energy Board, which delivers the ultimate regulatory verdict on the project.
Northwest Territories Industry Minister Brendan Bell said the potential for added delay adds to the risk of the window closing on Canada’s Arctic gas, although he was not sure whether there will be an “actual delay.”
Imperial Oil, the Mackenzie’s lead partner, said it needs more time to understand the court ruling.
Company spokesman Pius Rolheiser told reporters that an updated cost estimate for the project, currently carrying a price tag of C$7.5 billion, will not be completed this year as originally hoped and has been delayed until early 2007.
Concern that Alaska may fast track project
Causing unease among the Mackenzie proponents is word from Alaska Gov.-elect Sarah Palin that she wants to get shut-in North Slope gas to market and will revisit the Alaska project the day after she is sworn into office on Dec. 5.
Speculation persists that Imperial and its Mackenzie partners — Shell Canada, ConocoPhillips Canada and ExxonMobil Canada — will seek up to C$2 billion in federal incentives to proceed with a Mackenzie pipeline.
If the Alaska government decided to fast-track a pipeline from Alaska, that will compound the pressure on the Canadian government to decide what, if any financial assistance it is willing to give a Mackenzie line and how it will resolve the issue of whether TransCanada or Enbridge will control the Canadian segment.
David MacInnis, president of the Canadian Energy Pipeline Association, told the Globe and Mail that if Alaska picks up speed the “government of Canada will need to redouble its efforts on Mackenzie.”
“The U.S. has proven in the past that when interests are aligned there, they can turn on a dime and make things happen,” he said. The one consistent view in Canada among industry and government officials is that the Mackenzie project must be completed first or it will be again shelved indefinitely.
But that ultimately comes down to Imperial deciding it is ready to carry the load of the Mackenzie project at the same time it is immersed in a megaproject in the oil sands, while its 69.6 percent owner, ExxonMobil, is fully committed around the world, including a key role in developing Alaska gas.
