Mackenzie pipeline gets green light from panel

A $16.2-billion plan to build a natural gas pipeline through the Northwest Territories moved closer to reality Wednesday after winning the approval of a regulatory panel.
The proposed 1,200-kilometre pipeline would run through the Mackenzie Valley from Inuvik, N.W.T., down to the Alberta border, where it would connect with southern markets. ((CBC))
A proposed $16.2-billion natural gas pipeline through the Northwest Territories moved closer to reality Wednesday after winning approval from a regulatory panel.

The Joint Review Panel, a federally appointed group that for five years has been examining the socio-economic and environmental impact of the proposed Mackenzie Gas Project, released its long-awaited findings.

"The panel is confident that the project as filed, if built and operated with full implementation of the panel's recommendations, would deliver valuable and lasting overall benefits and avoid significant adverse environmental impacts," the panel said in the report.

"The proponents' mitigations and enhancements, the measures governments would put in place, and the panel's recommendations would, in combination, mitigate adverse impacts, reduce the risk and enhance the opportunities," the review panel concluded.

But the panel said its support is conditional on the pipeline proponents fully implementing the 176 recommendations highlighted in the 679-page report.

The pipeline proposal is backed by a consortium led by Imperial Oil Ltd., and includes ExxonMobil Corp., ConocoPhillips, Royal Dutch Shell PLC and the Aboriginal Pipeline Group.

The review panel's recommendations include:

  • Establishing project targets for greenhouse gas emissions
  • Creating wildlife protection plans in the region.
  • Ensuring government protection against development, at least on an interim basis, for lands identified for protected status.

Decision could come next fall

Panel hearings

  • The Joint Review Panel held 115 days of hearings in 26 communities between Feb. 14, 2006, and Nov. 29, 2007.
  • Both the opening and closing hearings took place in Inuvik, N.W.T., where the proposed pipeline route would begin.
  • The panel heard from 558 presenters, including individuals and representatives from various organizations.

(Source: Joint Review Panel)

The Joint Review Panel's report has been handed over to the National Energy Board, which will hold a final round of its own hearings in April. The board will then have to decide if the Mackenzie Gas Project can go ahead. The board's decision will then be subject to final approval from the federal cabinet.

The panel report has been anxiously awaited by the proponents of the pipeline, which would transport processed natural gas 1,196 kilometres from Inuvik, N.W.T., south through the Mackenzie Valley to a facility to be built in northwestern Alberta.

The natural gas would come from three gas fields, identified as the anchor fields, located near the Beaufort Sea in the Mackenzie Delta.

The industry consortium began looking at the possibility of a northern pipeline in 2000.

The release of the Joint Review Panel's report is "an encouraging step, but only one of the steps remaining," Imperial spokesman Pius Rolheiser told CBC News late Wednesday.

Rolheiser wouldn't comment on the panel's recommendations but said the pipeline proponents have 21 days to review the report and file their response with the National Energy Board.

The proponents are pleased this stage of the regulatory process is completed, he added.

"The Mackenzie project represents a significant, vital new source of gas that the North American market needs and will need in the future," Rolheiser said in an earlier interview.

Among the groups and stakeholders that began reviewing the report Wednesday was the Northwest Territories government, which will forward its official response in June to federal Environment Minister Jim Prentice. The federal government is also expected to respond to the report's findings.

"We recognize the project must satisfy the public interest tests raised in the context of the environmental assessment and regulatory processes and result in tangible benefits for northerners and Canadians in general," N.W.T. Environment Minister Michael Miltenberger stated in a release.

Hearings sparked strong debate

When the seven members of the Joint Review Panel began their work in 2004, the review was only expected to take 10 months.

But the panel faced numerous delays as it conducted public and technical hearings, often sparking strong emotional debates from both supporters and critics across the Northwest Territories.

Some northerners expressed fears of potential gas spills, as well as concerns the pipeline would disturb the habitats of caribou and other wildlife.

Supporters of the project have said it will create jobs and wealth in tiny remote communities along the pipeline route and across the territory.

"We can protect this land until hell freezes over, but if we do not have an economic base our people will perish," said Fred Carmichael, president of the Gwich'in Tribal Council at the start of the hearings.

Carmichael chairs the Aboriginal Pipeline Group, which represents the Inuvialuit, the Gwich'in and the Sahtu nations. It has negotiated a one-third stake in the Mackenzie Gas Project.

The Gwich'in and Inuvialuit, as well as two Sahtu governments, have signed impact and benefit agreements, while the Dehcho First Nations have not.

"We do not, at this time, have an agreement in principle with the Dehcho First Nations, but we continue to be in discussions," Imperial's Rolheiser said. "We've made considerable progress."

Federal support necessary: analyst

The Mackenzie project's price tag is now pegged at $16.2 billion, well over the previous estimate of $7.5 billion before 2007.

The proposal has the backing of the federal government, but to date Ottawa has not announced any financial support.

"Those discussions are ongoing and they're confidential," Rolheiser said. "The dialogue is continuing and we're pleased with the progress we've been making."

But Laura Lau, a senior portfolio manager with Sentry Select Capital Inc., said the federal government must financially support the pipeline project to help it survive.

"They have to subsidize it, or it's not going through," Lau told CBC News.

Lau said the conditions set out in the Joint Review Panel's report will likely mean the cost of the pipeline could reach $20 billion.

"It's looking clearer that the price tag will go up," she said. "There's a lot of things that have to be done … 176 stipulations make for a lot of added costs. You don't have to go through all of them to figure that out."

Lau noted that competition in the natural gas sector, including the development of a pipeline in Alaska, could spell trouble for the Mackenzie project.

"Natural gas is the most volatile commodity," she said. "In order to build a pipeline and put it in, you've got to have some certainty on price, and I don't believe that they have that certainty yet.

"This is going to be almost $20 billion. It's a lot of money to put in for something you don't know the price of in three, four years. … The government has to put in at least $1 billion or it's dead."

With files from the CBC's Lee Selleck