Barring appeals to the courts, the last regulatory hurdle has been removed from obstructing an approval ruling on Canada's entry in the Arctic pipeline race, the C$16.2 billion Mackenzie Gas Project (MGP).

After a last show of independence, the separate environmental and socio-economic Joint Review Panel (JRP) has complied with requests by the federal and Northwest Territories governments for a prompt response to their plans for its recommendations.

Instead of insisting on a September request for yet another round of hearings, the JRP circulated a 16-page document reciting a condensed version of its case for parlaying its share in the regulatory review into a blueprint for northern governance on fronts from polar bear habitat preservation to federal-territorial-aboriginal resource revenue-sharing and alcohol and drug abuse clinics.

A 154-page draft of the federal and territorial governments' response to the JRP's 176 recommendations remains confidential. Only the final version will eventually be made public as a filing with the National Energy Board (NEB), which retains responsibility for the MGP approval decision including conditions. The final say belongs to the federal cabinet, which has authority to ratify or reject NEB rulings but not to modify them under long-standing Canadian law intended to prevent political interference with regulatory agencies that deal in court-like, quasi-judicial fashion with issues deemed to require high levels of technical expertise.

The procedural spat with the JRP broke an NEB promise to end the Arctic project's six-year regulatory ordeal with a decision by the end of September. But board officials predict the additional delay will only last about a month. In a brief interview with NGI, Canada's Environment Minister Jim Prentice predicted the MGP regulatory package will be complete and delivered to the cabinet in Ottawa this fall.

As a last formal opinion on Arctic regulatory, economic and governance processes, the JRP document strongly suggests that the government sided with the gas industry's case for a narrow ruling on the project alone rather than a sweeping blueprint for northern development.

At a conference in Inuvik, representatives of project senior partner Imperial Oil outlined a three-year work program for the MGP consortium, which also includes ConocoPhillips Canada, Shell Canada, ExxonMobil Canada and the Aboriginal Pipeline Group.

The schedule starts in 2010-11 with re-staffing dormant project teams by each of the partners, selecting a prime contractor and recruiting its personnel, and reviving field work required by applications for thousands of permits required along the Mackenzie pipeline's 1,200-kilometer (750-mile) right-of-way. For 2011-12 the agenda includes carrying out field programs such as surveys, preliminary engineering, finalizing the route and making permit applications. In 2012-13, permit decisions will be sought while additional engineering is completed so that an updated cost estimate can be produced in preparation for a decision.

While the technical work proceeds, prolonged negotiations are expected to resume between the MGP and the federal and territorial governments on fiscal terms. In Ottawa, the former Liberal administration and the current Conservative cabinet alike have repeatedly ruled out direct government ownership of the Mackenzie pipeline or investment in the Delta production system. But all concerned have left doors open to devising a forgiving net-profit royalty regime akin to systems that have lit fires under oilsands and shale gas development in Alberta and British Columbia, plus support for the northern Aboriginal coalition that holds a one-third ownership share in the Arctic pipeline project.

©Copyright 2010 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.