The Mackenzie Gas Project (MGP) has been ordered by Canadian regulators to try and answer the question hanging over Arctic gas schemes in Canada and the United States alike: can they survive competition from the new generation of southern shale supply sources?
The National Energy Board (NEB) has called a special hearing on the topic for March 29 in the Northwest Territories capital of Yellowknife. Despite objections by MGP senior partner Imperial Oil, the NEB said the project owes an answer to questions posed by opponent Alternatives North in a motion seeking explanations before the final argument stage in Canada's marathon Arctic pipeline hearings begin in April (see NGI, Feb. 22).
The critics pointed out that feasibility studies supporting the current incarnation of the proposed MGP are nearly seven years old. Much has changed since the economic spadework was completed before the MGP partnership of Imperial, ConocoPhillips Canada, Shell Canada, ExxonMobil Canada and the Aboriginal Pipeline Group filed the construction application in the fall of 2004, the NEB said.
The board's special hearing order requires the MGP to file updated evidence on markets for northern gas, the economic feasibility of the pipeline and a current project schedule. However, the NEB said it would not make the consortium scramble to complete a more complicated engineering review, which would be needed to provide an updated cost estimate as well.
The last forecast, a pre-recession projection made while materials costs and contractor fees were at peak levels, pegged the Canadian Arctic project's price tag at C$16.2 billion (US$15.4 billion), with the total about equally divided between Mackenzie Delta production installations and the 1,220-kilometer (760-mile) pipeline from the Mackenzie Delta to the top of the established grid in northern Alberta.
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