NGI The Weekly Gas Market Report / NGI All News Access

Stakeholders Struggle to Get Mackenzie Project Back on Track

A national effort has begun across Canada to save the C$7-billion (US$5.6-billion) Mackenzie Gas Project, amid signs that the rescue operation will not be quick or easy.

The effort opened with a trip to Edmonton and Calgary by Michael Horgan, federal deputy northern affairs minister, and assistant deputy Liseanne Forand for meetings with officials of the Northwest Territories government, Mackenzie consortium leader Imperial Oil and TransCanada PipeLines.

There were "good meetings," Forand said. "We're very much engaged. We're very much supportive of the project. We would like to see what we can do that is appropriate for us as a government." But the meetings only opened discussions expected to be protracted. The initial talks were a matter of exchanging and clarifying information with no targets or deadlines set, Forand said.

The federal officials put together the trip as soon as they could make dates to start the discussions. Their trip was the first practical response to Imperial's decision April 28 to suspend work on the proposed C$7 billion Mackenzie Delta pipeline until industry, government, territorial and aboriginal leaders hash out a workable division of responsibilities (see NGI, May 2). Imperial cited a lack of progress to move the development forward. The announcement was considered a major setback for development of the project, which would bring new supplies of gas from the Canadian Arctic to southern Canada and the Lower 48. The gas consortium seeks arrangements that will let it have access to land and keep the project economic while coping with high northern expectations and unresolved native rights issues.

The next step in the federal effort to revive the project will be a trek north to meet aboriginal leaders, whose demands show signs of growing rather than settling down to levels the industry regards as realistic. At a community forum in Yellowknife, Stephen Kakfwi, former territorial premier, said aboriginal leaders are turning to the Mackenzie project to improve their people's "third world" conditions of unemployment, poverty, cultural decay and poor services because they no longer trust the federal government.

In addition to one-third ownership of the proposed northern gas transmission system already granted by the consortium to the Aboriginal Pipeline Group, the natives seek C$40 million (US$32 million) cash, possibly by imposing a special property tax. The northern community is fractured over those and other demands for help from the project on fronts ranging from road building to health care, education, welfare and preservation of aboriginal culture.

Territorial Premier Joe Handley called even the property tax a non-starter. The industry consortium has repeatedly agreed to provide training, employment and contractor assistance directly related to the project, but insists it cannot accept responsibility for wider cultural issues that should be up to federal, territorial, local and aboriginal governments.

National Energy Board Chairman Ken Vollman confirmed that the wider issues have spilled over into the regulatory arena, clogging it up and making it ever harder to advance projects with reasonable dispatch. "The regulator has a dual role to protect parties that are affected by infrastructure projects but at the same time to enable the development of this infrastructure when it is in the overall public interest," Vollman told a conference in Quebec City.

"Much of what we hear in the course of our work are concerns from parties impacted by energy developments. We have considerable practice in listening to and responding to those concerns. Rarely, in my experience, do we receive supportive comments from the public, saying they want the projects. Accordingly, we have to focus ourselves a little harder to make sure enabling is part of our regulatory culture."

Along with northern aboriginal communities, environmental groups are not about to make the regulators' job any easier in the case of the Mackenzie project. Their resistance has come together in an organization called Mackenzie Wild, which is mounting national protests including an Internet petition to put a stop to the gas development.

The Sierra Club of Canada, lead supporter of Mackenzie Wild, put out a message to conservationists, academics and anyone else it could reach that "regulators, First Nations and northerners should not be intimidated by this gambit by the oil companies. If constructed, the Mackenzie Gas Project would utterly transform the Mackenzie Valley from one of Canada's last great wild places to an industrial landscape. We need to take the time to ensure we understand what we are getting ourselves into from environmental, social and economic perspectives."

In the Alberta capital of Edmonton, Canadians for Responsible Northern Development stepped forward to say aboriginal expectations are not the only needs that should be incorporated into the Mackenzie project as a vehicle for industrial, technical and community change. "At the very least Canadians must insist on conditions for the ultimate end use of that precious finite commodity (gas), the Alberta group said.

It called for five conditions to be put on any Mackenzie approval: a commitment to reduce greenhouse-gas emissions of carbon-dioxide, use of the highest possible energy efficiency technology on the pipeline, optimum conservation practices in its day-to-day operations, a "comprehensive blueprint" for mass transit across Canada, and accelerated development of renewable energy.

Territorial, federal, aboriginal and industry officials made no overtures to environmental groups to join the Mackenzie project rescue drive. They remain the lone faction in outright, declared opposition to the development and are largely being left alone to fend for themselves in regulatory and political arenas.

The Canadian political arena is not helping the rescue effort, added sources close to the project. Officials hoped the rescue discussions would rapidly reach the top, tentatively scheduling a meeting with Deputy Prime Minister Anne McLellan for sometime next week. But they were not sure whether it would happen or what it might accomplish. McLellan and all other members of the government were confined to Ottawa, within a few minutes' drive of Parliament, by a crisis confronting the minority Liberal government.

Even an alliance with the rival New Democratic Party has denied the Liberals a majority in the House of Commons. The opposition Conservatives and Bloc Quebecois threatened to defeat the government whenever procedures opened a door for a vote, triggering a June election focused on a Quebec patronage scandal. It will be months before federal politics settles down enough to concentrate and make decisions on matters like the Mackenzie project, Ottawa observers predicted.

©Copyright 2005 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

Comments powered by Disqus