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Vol. 11, No. 2 Week of January 08, 2006
Providing coverage of Alaska and northern Canada's oil and gas industry

Hearings on grand scale

On brink of dual reg processes for Mac project; Arctic gas future on the line

Gary Park

For Petroleum News

Ready or not, residents of northern Canada — along with regulators, lawyers, consultants, engineers, politicians, environmentalists and others — are about to be plunged into an epic round of hearings that are unprecedented for any capital undertaking in Canadian history.

On the line is a decades-long dream of turnings vast Arctic natural gas resources into a commercial venture that could eventually carry 1.9 billion cubic feet per day to Canadian and U.S. markets.

Before 2006 is over it should be clear whether the Mackenzie Gas Project is on track for completion in 2011, or whether Canada’s northern petroleum riches will be shouldered aside by the much larger Alaska Highway gasline.

By the middle of February, parallel hearings are due to start rolling across the Northwest Territories and extending into Alberta.

NEB begins Jan. 25

The National Energy Board has set Jan. 25 — two days after Canada’s federal election campaign — to start its proceeding in Inuvik on the Mackenzie Delta.

A Joint Review Panel has also set Inuvik to begin probing environmental and socio-economic issues on Feb. 14.

It is expected the process will involve stops at 20 Northwest Territories locations, plus Whitehorse, Edmonton and Calgary and will wrap up in December.

But the schedule could be thrown off track by any one of several unresolved aboriginal issues.

A case has been filed before the Federal Court of Canada by the Dene Tha’ First Nation, which has land claims pending in northern Alberta and the southern Northwest Territories, and argues that Joint Review Panel hearings should be delayed until their concerns are resolved.

Talks are also continuing with the Deh Cho First Nations, whose land covers about 40 percent of the pipeline route, and who have been a persistent wild card by refusing to join northern native regions in settling benefits and access agreements.

Complicating matters, the K’asho, Gotine and Tulita/Deline communities have requested additional time to conclude their agreements.

Concern that Alaska could go first

On the larger front, John Duncan, a Canadian Member of Parliament and a natural resources spokesman for the Conservative Party, says the Mackenzie supplies are needed and the economics are right.

But he shares the concerns of many others in government and the industry that if the Mackenzie plan stumbles, the Alaska project will surge ahead.

Alaska has support from an unlikely source that is expected to figure large in the Mackenzie hearings.

Sierra Club directors Elizabeth May and Carl Pope have made a case to ExxonMobil (parent of Imperial Oil, the Mackenzie’s lead partner) to abandon their Canadian plans “in favor of advancing” Alaska.

They say an Alaska pipeline would cause less ecological damage than a Mackenzie route through boreal forest and taiga and the associated spin-off resource development along the right of way.

May and Pope also argue the Mackenzie gas would be exclusively used as an energy source to increase oil sands production in Alberta, adding to Canada’s greenhouse gas. Also under way are critical negotiations between the Mackenzie proponents and the Canadian government on the federal offer to assume a “greater share of the project downside risks provided it is able to increase its share of the potential rewards” — the breakthrough that made it possible for the project consortium to notify the National Energy Board it was ready to proceed to public hearings.

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Key players in the Mac regulatory process

• National Energy Board: Canada’s federal energy regulator has assigned a three-member panel consisting of chairman Ken Vollman and members Gaetan Caron and David Hamilton to conduct the main review and decide whether to approve or reject the project. That finding will also draw on the Joint Review Panel report. That review has 120 registered interveners.

• Joint Review Panel: A seven-person panel, including four aboriginal and Northwest Territories residents, will examine the potential social, environmental and economic impacts of the project and decide what, if any, conditions should be imposed on the licenses and permits. It has 99 individuals and organizations registered as interveners.

• Mackenzie Valley Land and Water Board: It has a mandate to regulate the use of land, water and waste deposits in the Mackenzie Valley. It is drawn from the Gwich’in Land and Water Board and the Sahtu Land and Water Board, with other board members nominated by First Nations, the Northwest Territories government and a chair appointed by the federal Indian and Northern Affairs Minister Andy Scott.

• Northwest Territories Water Board: Its function is to monitor the conservation, development and utilization of the water resources in the Inuvialuit region of the Northwest Territories.

Apart from the main applications, more than 4,000 licenses, permits and agreements are needed during the planning, construction and start-up phases of the project, covering benefits and access, wildlife compensation, land use, surface tenure, water use, quarry, bird sanctuary access and fisheries approvals.

Among the logistical challenges, apart from coordinating the two hearing streams, the Northwest Territories uses English and French — Canada’s two official languages — and nine aboriginal tongues, all of which the National Energy Board and Joint Review Panel said it welcomes in statements, evidence and verbal presentations.