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Tensions rise in Canada over regulatory approval process for Mackenzie gas National Energy Board chairman says a ‘magic wand’ won’t solve industry’s concerns, but board told exploration plans hinge on pipeline approval Gary Park PNA Canadian Correspondent
Tension levels between regulators and the petroleum industry over Canada’s regulatory processes for the Arctic rose several notches during public exchanges at a Calgary conference.
Irritated by repeated questioning of the need for so many regulatory layers in the Mackenzie Delta region, National Energy Board Chairman Ken Vollman fired back at the Canadian Energy Research Institute’s North American gas conference March 6.
He said the process must make provision for at least eight agencies operating under 40 years of statutes.
Vollman said that “when you try to fit them together, they just don’t mesh very well.”
But he said so much progress has been made in streamlining the approval processes that an Arctic pipeline could clear the regulators within 24 to 30 months of an application being filed and regardless of the complexities of dealing with aboriginal claims. Northern role still evolving However, a workable process that takes into account the interests of various northern stakeholders is still evolving, he said.
Vollman said major improvements have been made since 12 months ago when “a dozen or more agencies were each doing their own thing.”
He said agencies then were each doing environmental assessments, with a heavy overlay of duplication.
“What we have now is a very clear road map with (regulatory) groups agreeing that there will be on environmental assessment and that they will cooperate in doing that,” he said.
He cautioned that because there are legally and constitutionally binding consequences of aboriginal land claims settlements, consolidating or eliminating remaining agencies would require renegotiation of the claims.
That, he said, would be difficult or impossible. “There’s no magic wand to make multi-party cooperation go away,” he said. Mackenzie application expected in 2003 Vollman suggested he had been bombarded with questions from the industry, asking why the Mackenzie valley can’t have a single regulatory process and why all the boards and agencies are needed.
“I think I’m really speaking to those people in saying it isn’t that simple,” he said. “It’s been a long process to resolve land claims. I don’t think it’s practical to think that governments are going to want to change that legislation.”
Predicting that the first applications for a pipeline out of the Mackenzie Delta will be filed in 2003, Vollman said he was confident the mechanism for hearings will be in place by then. Straightforward regulatory system critical The importance of a clear and transparent regulatory system was hammered home by Pierre Alvarez, president of the Canadian Association of Petroleum Producers, who told the conference that construction of a pipeline to southern markets is “inextricably linked” to development of onshore and near-shore resources on the Mackenzie Delta.
Although the industry has leased most of the Delta and made almost C$1 billion in commitments to explore for natural gas “without access to the resources we’re out of business,” he said.
To that end, governments must ensure the regulatory pieces are in place within a public policy framework that recognizes aboriginal rights and land claims, he said.
As interest builds in the Arctic, government should focus on ways to handle an increased volume of applications in a timely and efficient manner, Alvarez said. He noted that Inuvik, as the major community close to the Delta, has only 2,000 residents. “The system there runs the risk of being overloaded,” said Alvarez, calling on government to give higher priority to ensuring that the infrastructure is available to handle greater activity. Access a concern Michel Scott, vice president of frontiers for Devon Canada Corp., which gained three Delta parcels through its takeover of Anderson Exploration Ltd., said access to pipelines is a major concern for exploration companies in the Arctic.
He said future exploration drilling is contingent on producers being able to deliver gas production to market.
For Devon, Arctic operations hinge on “what we see with a Mackenzie Valley pipeline,” Scott said. Wants Mackenzie line first As of a few months ago, the economics, federal regulation and fiscal certainty were not in place, although Devon believes Arctic reserves will eventually be a vital part of the North American supply equation, he said.
Scott said Devon would initially prefer to see a “bite-sized” Mackenzie Valley project go ahead first, suggesting that was a “much more manageable” undertaking than an Alaska link.
He said a northern pipeline would require a sustained NYMEX price of about US$2.50 per million British thermal units to be economic.
That price would be well within the means of a Mackenzie Valley line carrying 1 billion cubic feet per day. “The threshold (for a Mackenzie Valley pipeline) is lower than what you would need for Alaska,” he said.
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