Canada’s National Energy Board has approved a long-delayed $16 billion natural gas pipeline project along a 750-mile route through the Northwest Territories.
Imperial Oil Ltd. is the lead partner in the project, which would connect about a dozen onshore gas fields with markets in North America. The Mackenzie Gas Project, which would run through the Mackenzie Valley, would not be operational until 2018 at the earliest, according to Imperial. If all the approval conditions are met, construction could begin in 2013.
Other partners include the Aboriginal Pipeline Group, a business created and owned by aboriginal groups in the Territories. APG has rights to own a third of the pipeline. Other companies involved include ConocoPhillips Canada, Shell Canada and Exxon Mobil.
Floyd Roland, premier of the Northwest Territories, released a statement that estimated the project could contribute $67.5 billion to the economy of the region and more than $86 billion to Canada as a whole.
“The federal government’s decision is another significant milestone for this nation-building project and ensures that this project is advanced in the interest of all Canadians,” Roland said in the statement.
The pipeline would run from the Beaufort Sea to northwestern Alberta, carrying more than 1 billion cubic feet of natural gas per day. It was approved after a six-year regulatory battle that included critics who said the pipeline wasn’t needed due to the abundance of gas that could be imported from the United States.
Proponents noted that the project is designed to carry enough natural gas to supply more than 60 percent of all Canadians.
“It has been a long journey and a long process and we’re obviously pleased to see this,” said Pius Rolheiser, an Imperial spokesman.“There’s a significant focus on current conditions in the market. Well, Mackenzie is a project that could come on stream no earlier than very late this decade and would operate for a period of 20-plus years after that.
“So we’re focused not so much on near-term market conditions as we are on our best analysis of what the North American market is going to look like in 2020 and 2030 and 2040.”
The application for construction and operation of the pipeline was approved in December of last year; the Energy Board approved the final certificate – the “Certificate of Public Convenience and Necessity” – on March 10.
There remain issues to be addressed before construction begins; the Energy Board identified 264 conditions to engineering, safety and environmental issues for the project that must be met by developers. Other government agencies and local boards also need to sign-off on the project.
The operating companies hold interests in three natural gas fields in the Mackenzie Delta – the Taglu (Imperial), Parsons Lake (ConocoPhillips and Exxon Mobil) and Niglintgak (Shell). The operators also will be co-owners of the gathering system, a processing facility near Inuvik that will separate natural gas liquids from the natural gas, and a liquids pipeline from that facility to the town of Norman Wells.
“The potential returns on this initiative far exceed the cost of construction,” said Tourism and Investment Minister Bob McLeod. “We encourage industry and the federal government to work together to advance a fiscal framework similar to when today’s energy powerhouse provinces – Newfoundland, Alberta and Saskatchewan – were first developing their immense resource wealth.”
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