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Mackenzie at crunch point JRP makes final pitch for environmental, socioeconomic recommendations; NWT closer to resource control; McLeod sees hope in gas Gary Park For Petroleum News
In the final run-up to an expected December regulatory ruling that is crucial to the future of Canada’s Mackenzie Gas Project, the atmosphere is thick with more than the usual mix of hope and frustration.
A federally appointed Joint Review Panel that examined the potential environmental and socioeconomic impacts of a Mackenzie pipeline has made what may well be its last stab at persuading the Canadian and Northwest Territories governments to accept all 176 of its recommendations.
The JRP’s comments are being taken into account by the National Energy Board, which is due to decide before Christmas whether the C$16.2 billion MGP should proceed and, if so, under what conditions.
The JRP, in a 16-page letter to federal Environment Minister Jim Prentice, warned that unless its recommendations are incorporated in the NEB verdict “the adverse impacts of the project could be significant and its contribution towards sustainability could be negative.”
In their interim response to the JRP recommendations, the two governments endorsed only 10, while accepting another 77 provided they were reworded. They suggested some of the recommendations would restrict future economic development in the NWT.
JRP issue sustainability JRP Chairman Robert Hornal, in his Oct. 4 letter to the federal government, said failure to implement his panel’s recommendations means the opportunity for the MGP to “provide a foundation for a sustainable northern future would be lost.”
Kevin O’Reilly, a spokesman for Alternatives North, a social justice group, said the JRP letter is a “scathing indictment of government trying to get out of commitments that it’s already made — not doing anything to really protect the people of the North, the environment.”
One of the JRP’s key recommendations called for a resource revenue-sharing arrangement between the Canadian and NWT governments to be in place before the MGP proceeded.
The two governments confirmed Oct. 15 that they are actually within sight of a breakthrough to more than 20 years of talks aimed at turning control over federally administered land, water and natural resources to the NWT government.
But a final “devolution” deal is probably well outside the timelines for the MGP, although the draft agreement brings the NWT a major step closer to its cherished goal of having essentially the same power as Canada’s 10 provincial governments over the use of land and resources, except those regions covered under aboriginal land claims.
Agreement in principle Having reached an agreement in principle setting out the transfer of powers, both sides will meet again Oct. 30 to “decide what happens next,” a spokesman for the NWT government told The Canadian Press.
He said the negotiators are urging the governments to adopt what they view as the “best possible deal we can get at this point.”
The spokesman said the pact includes numbers for resource revenue sharing and the language that would allow control over federal land to proceed to “northern decision-making.”
The negotiators are also urging NWT aboriginal communities to participate in building on the groundwork achieved in the draft agreement.
NWT Premier Floyd Roland told the Canadian Broadcasting Corp. there is still a “lot of work to be done … (but) if we can sign off on this we move to the next stage and that would be to enter into a final series of negotiations.”
The tentative deal includes an annual transfer of C$63 million in federal money to enable the NWT to administer oil, gas, land, water and other resources, but the current federal operating grant to the NWT would be reduced by 50 cents for every $1 in resource revenue collected by the territorial government.
McLeod confident NWT Industry Minister Bob McLeod told Petroleum News Oct. 14 that he is full of confidence that the MGP will go ahead as part of a key element in the use of natural gas as a transition fuel from oil and coal to alternative and renewable energy sources.
He bases much of that optimism on the work of a congressional natural gas caucus in Washington, D.C., that supports a change by the transportation sector to using natural gas, bolstered by President Barrack Obama’s letter to the latest Alaska Oil & Gas Congress strongly endorsing the delivery of North Slope gas to North American markets, pledging the support of his administration to advance the project.
McLeod said there have also been signals that the Canadian government of Prime Minister Stephen Harper is paying more attention to the North in response to NWT efforts to promote Arctic sovereignty efforts.
He and Roland have made a more assertive case over the last three months that the MGP is one of several projects that could strengthen Canada’s stake in the North, although they are concerned that the U.S. government is more outspoken about the importance of an Arctic pipeline and is ready to provide multibillion dollar loan guarantees that could see an Alaska pipeline overtake the MGP.
To head off that threat, McLeod hopes the NEB will favor sunset clauses of 2013 for the MGP co-venturers to sanction their project and 2016 for a start of construction.
He said the biggest obstacle in the way of corporate approval is agreement between the government and the partners on a fiscal framework.
“I’m always optimistic,” McLeod said. “In my mind, a year from now the regulatory reviews will be completed, I expect a fiscal framework will be finalized and active discussions will be under way on the devolution question.”
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