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Two More Years (Optimistically) for Mackenzie Development Approval Process

As national authorities in Canada prepare to start a year of hearings Jan. 25, the Mackenzie Gas Project (MGP) is quietly warming up the next stage of the northern regulatory process for action by starting work on local and aboriginal agencies. In a progress report to the National Energy Board, the C$7 billion (US$6 billion) Mackenzie project reported filing 10 detailed applications with native and Northwest Territories authorities.

After nearly six years of striving to clear the first layer -- the NEB and the parallel environmental Joint Review Panel -- the MGP makes no predictions about the next steps in the complicated northern project. The progress report, a response to written information requests by the NEB, discloses "informal discussions...have been held with applicable land use planning boards and committees." In addition to MGP sponsors Imperial Oil, Shell Canada, ConocoPhillips Canada and ExxonMobil Canada, participants include the Canadian Association of Petroleum Producers.

CAPP, as the voice of companies responsible for more than 90% of Canadian gas supplies, has been holding "industry-wide discussions" with northern officials. The idea is to devise a template for dealing with the array of northern authorities on the Mackenzie Delta and along the 750-mile route of the proposed Mackenzie Valley pipeline.

An efficient procedure is expected to be necessary for the MGP to fulfill its potential as a "basin-opening" project that would open the Canadian North to development well beyond the estimated 6 Tcf of the region's most easily accessible reserves in three initial anchor fields. Further discoveries by the MGP sponsor group alone harbor an additional 6 Tcf or more on the Delta and nearby in shallow waters of the Beaufort Sea.

Other producers, such as Devon Canada, Petro-Canada, Chevron Canada Resources and Paramount Resources, say much larger potential exists on the northern coastline and along the pipeline route. The regulatory side of the Canadian arctic project is as much an exercise in exploration as northern drilling, the progress report reminds the NEB.

The MGP is a pioneer in a largely untried process created by land-claims agreements between the Canadian federal government and three aboriginal societies occupying the Delta and the northern 60% of the pipeline route: the Inuvialuit, Gwich'in and Sahtu. The agreements include a legislated requirement, in Ottawa's Mackenzie Valley Resource Management Act, for federal authorities to ensure industrial projects comply in all respects with land use plans devised by the aboriginal settlements. The rules are enforced by a special agency, the Mackenzie Valley Land and Water Board. In addition, the territorial municipal and community affairs department has authority over aspects of projects outside the aboriginal areas.

The regulatory structure not only confronts industry with multiple agencies. The apparatus also remains incomplete, effectively forcing producers that want northern gas to help create a workable system.

Among the aboriginal communities, only the Gwich'in on the southern Delta and northern reaches of the Mackenzie Valley have fully articulated a land use plan, created a board to enforce it and hired staff to do the work. The Sahtu still have only a draft land use plan and have yet to finish creating a board and hiring a staff.

In the Deh Cho ("Big Water," in Dene), a region that straddles the southern 40% of the proposed northern pipeline route, a land claim agreement has yet to be concluded. But even though big issues of principle -- led by ambitious demands for native self government -- remain hotly contested, the Deh Cho are well advanced in working on practical policies. A land use plan has been drafted, an embryo board has been created as a committee, and staff has been hired. The MGP describes the state of the quest for regional approval in cautious, diplomatic language that has become a hallmark of Canadian arctic gas pioneers.

The NEB is told "it is premature" to talk about how land use plans or the industry might have to change to adapt to one another. But "informal meetings have provided the proponents with opportunities to understand and address potential land use plan consistency issues." Northern regulatory officials predict the approval process will last until the end of 2007 even if all goes smoothly. The current unofficial schedule for planning purposes includes NEB and JRP hearings all this year, a JRP environmental report early in 2007, and a final verdict by the NEB and mandatory ratification by the federal cabinet in mid-2007.

Then comes six months or so of further proceedings by the aboriginal agencies that could include still more hearings, although all concerned voice hope that it will be unnecessary to repeat the NEB and JRP efforts at the regional and local levels.

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