MGP in choppy waters

2010 may be earliest Mackenzie gas line co-venturers could give project go ahead

Gary Park

For Petroleum News

No-one ever said it was going to be a cruise.

The question now is whether the co-venturers would have remained aboard had they known nine years ago about the storm-tossed voyage that lay ahead.

When feasibility studies for the Mackenzie Gas Project were under way, one of the then-partners, Gulf Canada Resources (now part of ConocoPhillips), was eagerly forecasting that natural gas could start flowing from Canada’s Mackenzie Delta by 2006.

The MGP Web site still says that “if the project proceeds as expected,” the consortium’s goal is to have gas moving by 2010.

But 2010 has been off the table for many years now. The latest guess has been closer to 2015 and even that seems unduly optimistic.

What happened in the space of two days this month was conclusive proof — if any was needed — that the MGP has been probably the most complex, challenging regulatory process in Canadian history.

Environment Minister Jim Prentice, the federal government’s point-man for the MGP, said on Dec. 3 that “a lot of the (regulatory) work has now been done,” giving him reason to believe that the JRP report could be delivered between March and May 2009, allowing the corporate partners to make investment decisions before the end of 2009.

More than any other cabinet minister, Prentice has a reputation for getting things right.

It’s not clear why he was off the mark this time, but the federal Joint Review Panel, responsible for dealing with the MGP’s environmental and social matters, announced two days later that it will take another year for its work to be completed.

At that point, the JRP’s recommendations — based on 115 days of public hearings and more than 5,000 written submissions — go to Canada’s National Energy Board which rolls that information in with its own economic findings before delivering the regulator’s verdict to the federal government.

Imperial spokesman says this is ‘not a positive development’

There was an added edge to his sense of frustration when Imperial spokesman Pius Rolheiser reacted to the JRP’s announcement.

“Clearly this is not a positive development and clearly we are very disappointed,” he said. “This is well beyond anything we had expected. … We’ll have to sit down and consider what this might mean” to the MGP timetable and costs.

“Because of the economics, the Mackenzie project has never been a sure thing,” Rolheiser said. “We remain committed to the project. But is a sure thing? No.”

He would not be drawn into commenting on if and when the MGP might meet the fate of an earlier attempt to develop Canada’s Arctic natural gas and get shelved.

Prentice was also clearly baffled by the JRP development, saying he was “disappointed to hear of the (revised) timeline.”

Even so he won’t give up on hopes that the MGP will proceed with plans to initially carry 800 million to 1.2 billion cubic feet per day of Mackenzie Delta gas, with the prospect of growing to 1.9 bcf per day.

For Prentice’s government the MGP is the possible trigger to even greater resource development in the Arctic, a vital element of Canada’s strategy to assert its sovereignty over what has been traditionally viewed as Canadian territory.

The Far North is also a key plank in Canada’s long-range energy security if the industry sees reason to step up its oil and gas exploration of the Northwest Territories, Mackenzie Delta, Beaufort Sea and Arctic Islands.