A new target of 2018 — four years later than the previous goal — has been set as the earliest possible date for gas to start flowing out of the Canadian Arctic via the proposed Mackenzie Gas Project (MGP).

The production and pipeline scheme’s senior partner, Imperial Oil Ltd., outlined the revised schedule in updated evidence on the MGP’s economic feasibility that was requested by the National Energy Board (NEB). Project leaders will be cross-examined on the outlook at a special hearing this spring, prior to the marathon regulatory review’s final argument stage in April (see Daily GPI, Jan. 8). The construction target date setback is blamed primarily on regulatory delays, which have dragged out review of the MGP for 66 months to date.

No new price tag was revealed to replace the C$16.2 billion (US$15.7 billion) last estimate for the full development. About half the costs are attributed to the proposed 1,200-kilometer (746-mile) Mackenzie Valley Pipeline from Inuvik to the top of TransCanada Corp.’s NOVA gas network in northern Alberta. The NEB did not demand a new projection, although expenses are believed to be dropping sharply since the last estimate was generated at the peak of a fevered Canadian energy facilities construction boom in 2007.

The updated feasibility study predicts that there will be ample room for MGP deliveries on North American markets, regardless of shale gas production and some anticipated decreases in consumption.

Canadian gas demand is forecast to rise by about 20% to 12 Bcf/d as of 2030, with much of the increase generated by steady expansion of Alberta thermal oilsands production. Over the same period gas consumption in the United States is forecast to rise steadily to 76 Bcf/d, a 26% increase from the depressed hard-times estimated average of 61 Bcf/d for 2010.

Lowered prices, including effects of shale gas, will play a role in the consumption revival, the new MGP forecast predicts.

“Gas requirements for electric power generation are anticipated to be the main source of growth in gas consumption in the U.S. Lower 48 states in the forecast period,” the new assessment says. “This is largely because much of the nonrenewable electric generation capacity that is added is assumed to be gas instead of coal-fired, as the result of the cost disadvantage that coal plants will face because of carbon emission constraints.”

On the supply side of the international market, the MGP outlook expects Canadian production to peak at 17 Bcf/d in 2019 — up 9% from 15.7 Bcf/d this year — if the MGP supplies arrive on time in 2018. Shale production is expected mostly to offset steep declines in Alberta conventional output over the next few years, rather than to cause a big jump in total supply capacity.

In the U.S., the new MGP outlook anticipates that Lower 48 production will climb by about 25% to 69 Bcf/d as of 2030, thanks to gains in the Gulf of Mexico plus construction of a proposed Alaska gas pipeline as well as from spreading shale gas production.

But total Canadian and U.S. demand of 92 Bcf/d in 2030 is expected to exceed the forecast overall supply from both countries of 88 Bcf/d, creating substantial continuing demand for liquefied natural gas (LNG) imports from overseas.

Shale development in both countries “is helping total domestic production to meet gas consumption requirements, and production from that source will likely contribute to an even greater extent in the future,” the new MGP outlook says. “However, even with the delivery of gas to the North American grid via pipelines from the Mackenzie Delta and Alaska, LNG imports will still be needed to balance supply and demand,” the updated Arctic pipeline economic feasibility study says.

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