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Mackenzie gasline project not a slam-dunk, says Imperial
Gary Park
Partners in the Mackenzie Gas Project intend to file their regulatory applications at an early date, but even then the C$5 billion undertaking is “by no means a certainty,” said a spokesman.
And much work has yet to be completed just to reach the filing stage, which has fallen behind because of a delay in receiving final instructions on how to prepare the environmental assessment, said Hart Searle, of Imperial Oil, the lead partner in the project.
The 70-page terms of reference were released Aug. 18 by the Canadian Environmental Assessment Agency, more than six weeks behind the original target.
That puts into doubt the partners’ hopes of filing the main regulatory applications for field development, gathering systems and the main pipeline before the end of summer on Sept. 21. Not fixated on a certain date However, Searle noted that “from the get-go we have made a commitment to do things right,” which means the proponents are not fixated on a certain date.
He said the intention is to file “as soon as we are ready,” while adding that “we can’t offer a date.”
A filing “will be a milestone, but the project is by no means a certainty,” Searle told Petroleum News, noting that we are asking the owners “to put billions of dollars on the table” when the uncertainty of gas prices makes the economics difficult.
Earlier this month, Hal Kvisle, chief executive officer of TransCanada, sent up a similar warning flare.
If the regulatory and approval processes take too long, allowing the development of Alaska gas or liquefied natural gas projects to proceed first, the window could slam on the Mackenzie scheme, he said. Unprecedented terms of reference for EIS The terms of reference for the environmental impact statement are all the proof, if any was needed, of the challenges ahead.
What is required by the three jurisdictions that make up a joint review panel is probably unparalleled in scope for any Canadian project, although Searle said the questions to be answered are within the range of expectations of the Mackenzie partners.
For example, the joint review panel will require the applicants to describe how climate change as a direct or indirect result of human activity that “alters the composition of global atmosphere” – quite apart from natural climate variability – could affect the project over its 30-year lifespan.
The terms of reference say that for “certain portions of the project area it may be necessary to identify changes in water levels and storm surges, fire, permafrost conditions and changes to other landscape and waterscape processes that could occur because of climate change.” Environmental contingent gathering force While having to deal with a barrage of questions, the Mackenzie consortium is also facing a gathering storm of opposition and concern from environmental groups.
The Canadian Arctic Resources Committee and the Sierra Club of Canada plan to make the case that the project is planned for one of the most sensitive regions on the planet, where the rate of warming is already taking its toll.
In addition, Dene Youth Alliance, which sees gas development as potentially being incompatible with aboriginal culture and traditions, has joined the ranks of those uneasy about a pipeline. Where gas goes outside scope of review But any attempts by opponents to open up the issue of using Arctic gas as a fuel source for the extraction and processing of bitumen in the Alberta oil sands have been rejected by the joint review panel.
There have been suggestions that all or most of the Mackenzie Delta gas would go directly to the oil sands.
Although the Delta gas owners – Imperial, Shell Canada, ConocoPhillips Canada and ExxonMobil Canada – are all involved in oil sands and heavy oil projects, they have said that decisions on where Arctic gas might finish up are outside the scope of the environmental review.
The environmental review is expected to take up to 14 months as part of an anticipated two-year regulatory process.
It will be conducted by a seven-member panel, chaired by Vancouver-based consultant Robert Hornal and will combine the oversight responsibilities of the National Energy Board, the Northern Gas Project Secretariat, the Canadian Environmental Assessment Agency and the Mackenzie Valley Environmental Impact Review Board.
Hornal, who served as director of the federal Indian Affairs’ Program, said in a statement that politics has no role in the panel’s assigned task of examining the environmental and social consequences of the project.
In addition to the environmental review, the project faces public hearings involving 12 federal, Northwest Territories and aboriginal agencies as part of more than 4,000 licenses, permits and agreements needed for the planning, construction and start-up phase.
That list includes benefits and access agreements with aboriginal communities, along with agreement covering matters such as wildlife compensation, land use, surface tenure and water use.
Searle said “we are still grinding away on benefits and access agreements,” in challenging discussions to “move the yardsticks forward.”
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