Imperial Oil and its partners want to build a 1,200-kilometre natural gas pipeline stretching from the Mackenzie River Delta to a hub in northern Alberta. (Rick Bowmer/Associated Press)

The National Energy Board has approved the long-proposed Mackenzie Valley pipeline, a big step forward for the $16.2-billion natural gas project.

In its written decision released Thursday, the federal energy regulator ruled that Imperial Oil and its partners' proposal to build the 1,200-kilometre pipeline through the Northwest Territories "is in the public interest."

The board's approval comes with a total of 264 required conditions to ensure the northern environment is protected, and to ensure pipeline safety.

Calgary-based Imperial is the lead company in the consortium that is spearheading the pipeline. The consortium also includes Exxon Mobil Corp., ConocoPhillips, Royal Dutch Shell PLC and the Aboriginal Pipeline Group.

6 years of review

The decision caps a six-year review process by the NEB, which held public hearings and analyzed data on the proposal since the pipeline consortium submitted its application in 2004.

The pipeline's proposed route would run along the Mackenzie River Valley and through a number of remote Northwest Territories communities to northern Alberta. (CBC)

Around that time, an independent joint review panel was created to consult northerners about the environmental and socio-economic impacts of the proposed pipeline.

The panel released its report Dec. 30, 2009, approving the project as long as its 176 recommendations were followed by the pipeline proponents and the federal and N.W.T. governments.

The panel's report was submitted to the NEB, which held its final round of hearings in April. In all, the energy board held 58 days of hearings in 15 communities across the Northwest Territories and northern Alberta.

Over the past six years, regulators heard passionate debates between pipeline supporters who believe a pipeline would pump jobs and money into the Northwest Territories, and critics who worry the project would open vast areas of the territory to environmental damage and social disruption.

Imperial must decide by 2013

With the NEB's approval in hand, it is now up to the federal cabinet to make a final decision on the planned project. It is also up to the consortium to decide by Dec. 31, 2013, whether it will actually go ahead with building the pipeline.

Imperial Oil had asked the NEB for three more years to decide, as it wanted to see how natural gas prices would recover as well as negotiate some kind of financial agreement with the federal government.

'Our approval gives Mackenzie Delta gas an opportunity to compete. Denial would block that opportunity.'—National Energy Board

But the NEB turned down that request, saying northerners are anxious to see progress on the project and prepare.

The board kept the original deadline of 2013 for the consortium to submit its decision, as well as give an update on how much the project will cost. Actual construction must start by the end of 2015, according to the energy board.

The pipeline proponents will also have to secure land- and water-use permits, sign benefit and compensation agreements with First Nations along the pipeline route, and work out financial arrangements.

The National Energy Board's decision comes at a time when natural gas markets are recovering from the recession. While critics have pointed to emerging natural gas sources, such as shale gas and liquefied natural gas, the energy board said a northern pipeline should still be given a chance.

"Natural gas price trends remain uncertain. We do not agree with those who say these are reasons to deny the project," the board's decision says.

"Our approval gives Mackenzie Delta gas an opportunity to compete. Denial would block that opportunity."

Northwest Territories Industry Minister Bob McLeod called the decision "an early Christmas present."

"This is an important milestone for a project that could provide significant economic and environmental benefits for the Northwest Territories and for Canada," he said.

Bob Reid, president of the Aboriginal Pipeline Group, hailed the decision, saying it's a "great day both for the North and for Canada as a whole."

"This is truly a nation-building project. It's going to be able to deliver the clean energy we need in an environmentally responsible way."

But Kevin O'Reilly of Alternatives North, a social justice coalition operating in the Northwest Territories, said he was disappointed that "they didn't pay more attention to sustainability."