Plans to build a massive natural gas pipeline in one of the remotest regions of Canada got a big boost last week after a government-appointed review panel approved the C$17 billion (€11.3 billion; $16.4 billion) project, already nearly a decade in planning.
The seven-member review panel recommended that the National Energy Board, a regulatory body, allow the Mackenzie Gas Project to move ahead, subject to 176 recommendations to mitigate its social and environmental impact on the Northwest Territories – a sparsely populated region near the Arctic circle in northern Canada.
The board has yet to render its final approval for the project: an ambitious bid to create a 1,220 kilometre-long pipeline across the territory, complete with a gas gathering plant and related infrastructure, to pump gas from three reserves near the Mackenzie River delta in the Arctic north to the province of Alberta in the south.
Mackenzie Gas Project
If it is approved, though, the project will easily rank as one of the largest infrastructure projects in the country, providing an opportunity for private investors to help meet a part of its C$17 billion cost. It would also add significantly to Canada’s natural gas output, though environmental groups worry over how the massive natural gas reserves would ultimately be used. At 6 trillion cubic feet, the size of the reserves approximately equals Canada’s 2008 annual natural gas production, according to data from the National Energy Board.
A pipeline would open up the North to future development and provide an economic future for the Northwest Territories
“The goal of this is in effect to commission these very large natural gas discoveries that were discovered back in the 70s but have yet to be developed,” said Pius Rolheiser, a spokesperson for Canada’s Imperial Oil, which owns 100 percent of the largest of the three reserves, the 3 trillion-cubic-foot Tagla field. Imperial has partnered with three other oil companies that own rights to their reserves – ConocoPhillips, ExxonMobil Canada and Shell – to build and finance the project.
The oil companies have also partnered with a group of native residents, represented by Calgary, Alberta-based Aboriginal Pipeline Group, who signed on to the project in 2001. The group stands to get up to one-third of the equity from the pipeline, provided that it is utilised at full capacity. In return, they will have to find a way to finance one-third of the cost of the pipeline, which alone represents C$7.8 billion of project’s total price.
Currently, TransCanada, a Canadian gas trasmission company, is providing the aboriginals with an interim financing commitment to help them meet their share of the project's cost, Rolheiser said. He added that the project “could not, would not proceed without the support of the aboriginal people of the North”, most of whom support it now thanks in part to its potential economic benefits.
“A pipeline would open up the North to future development and provide an economic future for the Northwest Territories,” said Orland Hansen, a spokesperson for the Aboriginal Pipeline Group.
Overall, we were disappointed that they decided to recommend for it to go forward
Environmental groups, however, remain concerned about the end-use of the natural gas that would come through the pipeline. Once the gas gets to neighbouring Alberta, it can either be shipped to other markets via connecting pipelines or used to power the extraction of oil from Alberta’s tar sands – a large region where oil can be separated from a mix of sand, clay and other minerals using a very energy-intensive separation process.
“Overall, we were disappointed that they decided to recommend for it to go forward,” said John Bennett, executive director of the Sierra Club of Canada, an environmental group.
“Given that they did go forward, some of the recommendations are very positive,” he added, citing the review panel’s recommendation that the natural gas extracted from the reserves be used as a “transitional fuel in the process of developing a sustainable low-carbon economy” in Canada.
[The Project] could not, would not proceed without the support of the aboriginal people of the North
“We read that ‘transitioning away’ as not using [natural gas] . . . for tar sands oil extraction,” said Susan Casey-Lefkowitz, director of the Canada Program at the Natural Resources Defense Council, an environmental group. “It is ironic that it is being used right now to fuel tar sands extraction,” she added.
Sarah Kiley, a spokesperson for Canada’s National Energy Board, said the board does not have the authority to regulate how the gas will ultimately be used once it gets to Alberta. However, she said the board does have the power to regulate environmental aspects of the project and “we want to make sure that we are promoting a project that can be safe, in the public interest and economically efficient”.
Public hearings on the project are scheduled for April, she said, and the National Energy Board expects to issue a final regulatory decision on the project in September.
But even with an affirmative decision in-hand, it could still be several years before the companies break ground on the Mackenzie Gas Project.
“A decision to actually construct the pipeline is still about three years away,” said Hansen, the Aboriginal Pipeline Group spokesperson, citing the need for further cost estimates and engineering work.