Open Mackenzie pipeline to other companies, Prentice proposes

Last Updated: Friday, June 8, 2007 | 10:14 AM CT

CBC News

Companies involved in the proposed Mackenzie Valley gas pipeline should consider allowing others who want to explore the resource-rich valley to access the pipeline, federal Indian and Northern Affairs Minister Jim Prentice says.

Speaking to a meeting of the Canadian Gas Association in Ottawa Thursday night, Prentice said the consortium of companies driving the pipeline proposal may have to go back to the drawing board in order to make it work.

Prentice said the current proposal "allows the owners of the anchorfield to get their gas in the system. There has been concerns raised by other people who might find gas in the future, and their ability to access the pipeline."

Companies interested in exploring the Mackenzie Valley have been critical of Imperial Oil, which is leading the consortium, saying the company has been refusing to say how much it would charge them to ship the gas out.

Prentice said everyone has to have access to the pipeline, and the federal government can encourage that to happen without getting directly involved in funding the project.

"The issue of whether we accept a royalty in kind, namely in gas as opposed to dollars, is an issue that we can discuss," he said.

In May, Prentice denied reports that said the federal government was thinking of buying out part or all of the project, which would create a 1,220-kilometre pipeline along the Mackenzie Valley in the Northwest Territories to the Alberta border.

Prentice said the federal government is still not interested in owning or subsidising any part of the project.

However, he said he isn't closing the door to offering guaranteed loans to the Aboriginal Pipeline Group, which represents aboriginal groups and is seeking to get a one-third stake in the pipeline.

Hal Kvisle, president and CEO of TransCanada Corp. — which finances the Aboriginal Pipeline Group — said Prentice's approach is the right one.

"There's many precedents, even in the United States, [where] the major pipelines were underpinned by commercial arrangements that served all users, not just the initial producer," Kvisle said.

Despite recent rumblings suggesting the Mackenzie Valley pipeline is dead — including remarks last month from Exxon Mobil CEO Rex Tillerson, who said his company may abandon the long-delayed pipeline project if the Canadian government does not foot part of the bill — Kvisle said he and others in the industry are optimistic that the deal may yet become a reality.