Costs are up by 40% and an aboriginal lawsuit clouds the outlook for the regulatory process, but strong supply needs and prices convinced the Mackenzie Gas Project to press ahead by filing construction applications last week.

A C$2 billion (US$1.5 billion) increase in the price tag to C$7 billion (US$5.8 billion) includes new facilities, added delivery capacity and results of the first engineering work done to move the development beyond the concept stage, spokesman Hart Searle said. The construction application “demonstrates our commitment,” said the president of senior Mackenzie consortium partner Imperial Oil Resources, J. Michael Yeager said.

About C$200 million (US$150 million) has been spent on preliminaries so far and the total will rise to C$400 million (US$300 million) by...