Glacial progress

TransCanada chief warns Alaska gas or LNG could return Canadian project to back burner; frustrated with pace of federal efforts to settle land claims

Gary Park

Petroleum News Calgary Correspondent

TransCanada CEO Hal Kvisle is so frustrated with Canada’s “ponderous regulatory and approval processes” that he is warning against any assumptions that the Mackenzie Gas Project is a given.

“People shouldn’t necessarily assume that the voracious market appetite will be there,” he told a conference call July 23. “We should go ahead with this project while it’s attractive to do so.”

Kvisle said if Alaska gas gets to market first and a wave of liquefied natural gas projects are built, the Mackenzie gasline project could be shelved as it was in the late 1970s.

“I would not like to see it go on the back-burner for another 25 years,” Kvisle said.

Hart Searle, a spokesman for the Mackenzie project, told Petroleum News that the partners “appear to be on track” to file the main regulatory applications for field development, gathering systems and the main pipeline later this summer, as planned.

Without being drawn into commenting on Kvisle’s reference to the “glacial” pace of regulatory progress, Searle said meetings will be held at some point with ministers in the new federal cabinet who are directly involved in Mackenzie issues, such as newly-appointed Indian Affairs and Northern Development Minister Andy Scott and reappointed Natural Resources Minister John Efford.

However, Searle said the decisions on land claims and rights-of-way are between the federal government and the First Nations.

“Most definitely, we would like to see the negotiations come to fruition,” he said. “Would we like to see greater progress? Yes, I think we would.”

Aboriginal land claims still not resolved

He noted that although the proponents believe it will take only two years to complete the regulatory phase, assuming applications are filed this year, it has taken “several years just trying to get into the regulatory process.”

In addition to negotiating the maze of boards and agencies in the Northwest Territories, the Mackenzie partners are also waiting for the Canadian government to resolve aboriginal land claims and right-of-way issues, Kvisle said.

He said the Inuvialuit and Gwich’in in the northern NWT communities continue to support the C$5 billion project, but right-of-way access is unresolved with the Sahtu in the central Mackenzie Valley and there is no sign of a breakthrough in the land claim negotiations with the Deh Cho, who occupy the lower third of the pipeline route.

Kvisle said it is possible the Mackenzie partners might seek a different timetable on building the pipeline and settling the land claim, but added “that’s a big if.”

The Deh Cho First Nation reiterated a month ago that it will launch a court action blocking the pipeline unless it gets a seat on the environmental review panel.

Deh Cho Grand Chief Herb Norwegian said his 4,500 residents need environmental guarantees because there is no land claim to protect their interests.

Vacuum at the federal policy level

In pointing a finger at the government, he said it is easier for TransCanada to build a pipeline across private land in Ontario than across federal lands in the Arctic.

Until the First Nations matters are clarified “the project is not going ahead,” he said.Meanwhile, Imperial Oil, Shell Canada, ConocoPhillips Canada and ExxonMobil Canada, owners of the anchor gas fields on the Delta, are “doing everything possible” to meet their timetable.

Kvisle, referring to community opposition that scuttled TransCanada’s hopes of partnering in an LNG project in Maine, said the “glacial pace” of approvals will only have repercussions on the marketplace.

“It is going to take longer rather than shorter (to get approvals) and commodity prices will be higher rather than lower for the foreseeable future,” he said.

Alaska maybe, Canada nothing doing

Gary Park

That was the message July 23 from the Canadian pipeline company’s CEO Hal Kvisle, who said “I think it is,” when asked by one analyst if the Alaska Highway project is a competitive process.

Noting that TransCanada is the only company to hold certificates to build a pipeline in both Alaska and Canada, he questioned whether rivals who “show up from time to time” in Alaska have the technical ability or “financial horsepower” to actually take over the project.

Over the past two months, since renewing discussions with the Alaska government, TransCanada is moving ahead with processing its application for a pipeline right-of-way across state lands.

Given that any decision in Alaska requires the support and involvement of North Slope producers, Kvisle said TransCanada “would be pleased to convey” the certificates it was granted 25 years ago to the producers so long as an appropriate commercial agreement could be negotiated.

But he said that TransCanada, through its wholly-owned subsidiary Foothills Pipe Lines, has “spent significant dollars” on the so-called pre-build legs in Alberta, British Columbia and Saskatchewan.

The pre-build portions from central Alberta to the western and eastern U.S. and designed for eventual tie in with the Alaska Highway pipeline, cost a combined C$1.5 billion in the 1980s and deliver 3.3 billion cubic feet per day of gas from Western Canada.