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Mackenzie Gas Project Suffers Another Delay

May 26, 2008
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A regulatory report on the C$16.2 billion Mackenzie Gas Project (MGP) has been delayed for several months, which once again will push back the long delayed start-up date for Canada's Arctic pipeline.

The Joint Review Panel (JRP), composed of federal and Northwest Territories authorities, launched a formal environmental and socioeconomic assessment of the development plan for the MGP in late 2004 (see NGI, Nov. 15, 2004). The assessment was expected to take about four years, with completion by October. However, project leader Imperial Oil Ltd. said late last week that the JRP assessment had been delayed.

"In recent weeks the panel has come to realize that, because of this amount of information, they will not be able to complete the report this year" said Annette Bourgeois-Bent, a spokeswomen with the Northern Gas Project Secretariat. "The information that did come in was more than what people thought it might have been."

No date has been set for the assessment's completion, she said. Following 150 days of public hearings, the panel is reviewing 5,000 individual submissions, which translated into more than 11,000 pages of transcripts.

The final assessment has to be completed before Canada's National Energy Board rules on whether the project may move forward. The 750-mile pipe would carry as much as 1.9 Bcf/d to Canadian and U.S. markets from the Mackenzie Delta, which is on the coast of the Beaufort Sea. Until Imperial's announcement of the JPR delay, the MGP was expected to ramp up around 2015.

The continuing delays have pushed up the price for the MGP many times over. When the JRP launched its assessment four years ago, the pipeline's cost was estimated at C$7 billion. A year earlier the cost was estimated at C$5 billion.

Imperial has partnered on the MGP with ExxonMobil Canada, Shell Canada Ltd., ConocoPhillips Canada and the Aboriginal Pipeline Group (APG). TransCanada Pipelines Ltd. is the financial backer of the APG, which holds a one-third interest in the project. With the APG deal, TransCanada has an option to buy a share in the pipeline.

TransCanada last week was selected by Alaska Gov. Sarah Palin and her administration to build a pipeline from the North Slope to Alberta to commercialize the state's vast natural gas reserves (see related story). The Alaska pipeline, called TC Alaska, is expected be presented to state lawmakers, who would have 60 days to decide whether to move forward with the project.

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