GLOBE SERIES

Mackenzie gas project – one step closer, but not there yet

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Source: GLOBE SERIES

The proposed $16.2-billion Mackenzie Valley gas pipeline is a step closer to reality after the federal and Northwest Territories governments agreed Monday with most of the recommendations set out by a review panel last year.

The governmental response to the Joint Review Panel's (JRP) report on the Mackenzie Gas Project (MGP) outlines how the governments will ensure that appropriate mitigation measures are in place to respond to environmental, social, cultural and economic issues.
 
Overall, the governments accept or have accepted the intent of a vast majority of the recommendations directed toward them. In most cases where a recommendation is not accepted, it is because the recommendation is determined to be outside the scope of the JRP's mandate.

'An unprecedented level of public consultation was undertaken prior to finalizing the governments' response which highlights our commitment to implementing the appropriate mitigation measures to protect the environment and address the social, cultural and economic impacts associated with the proposed project,' said Canada's Environment Minister, John Baird.

This view was echoed by Michael Miltenberger, Minister of Environment and Natural Resources for the Northwest Territories, who said 'Should the MGP proceed, the Government of the Northwest Territories is confident it will provide tangible benefits for the residents of the Northwest Territories and that the environmental and socio-economic impacts will be minimized. '

Even if the two governments give the project a final 'go ahead', there is no assurance that the project will actually proceed. The MGP is a private-sector initiative and a decision to proceed will be based upon the proponents' assessment of the risks and rewards associated with this project.

The pipeline plan is still being reviewed by the National Energy Board, the federal body that regulates parts of Canada's energy sector. The NEB's decision on whether to approve the project is expected before the end of this year. Even so, Imperial Oil has said it won't make a final decision on whether to proceed until 2013.

The prolonged regulatory review has frustrated many, especially Aboriginal groups who saw opportunities for jobs and economic development associated with the project.

Quoted in a Hill Times article, Aboriginal Pipeline Group chair Fred Carmichael said people living along pipeline hubs who have been preparing for its arrival for years by expanding their businesses are feeling the delays. 'It brought a lot of excitement and hope for the people and they invested, they got trained. And here we are three years late, four years late, and these people are having a hard time surviving.'

The delay has also raised doubts in the energy sector, particularly since other more accessible sources of natural gas are beginning to be exploited further south. Shale gas deposits in British Columbia, Alberta and in Eastern Canada could add to doubts about the economic viability of the Mackenzie project.

And even with the green light from the NEB, construction isn't an automatic next step. The companies involved would need to do fieldwork, develop agreements with First Nations not part of the Aboriginal Pipeline Group, and get thousands of permits for everything from creek crossings to barge landings, said Pius Rolheiser, Imperial Oil spokesperson.  

Stephen Hazell, a lawyer with the environmental law group Ecojustice, is even less optimistic: 'The Mackenzie gas project is dead,' he said. Groups pushing for the pipeline are in closed-door talks with the federal government over financial aspects of the project such as royalties and taxes, according to Hazell, quoted in the same Hill Timesarticle.

He said Imperial had asked for up to $2-billion in fiscal incentives such as deferred royalties and loan guarantees. Mr. Rolheiser did not confirm or deny the number because he said the talks are confidential.

'There's just no way that even a government dominated by MPs from oil country, from Alberta, is going to hand out that kind of money,' said Mr. Hazell. 'Especially when there's international pressure to eliminate subsidies to the fossil fuel industry.'

The government's response, entitled Foundation for a Sustainable Northern Future, is posted here on the Canadian Environmental Assessment Agency website.

The National Energy Board will consider the response prior to issuing its 'reasons for decision' regarding the Certificate of Public Convenience and Necessity, which is a licence to the consortium to proceed.
Source: www.ec.gc.ca

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