MacKenzie Valley Pipeline clears hurdle

The Mackenzie Valley natural gas pipeline sponsors have reached an agreement with Northwest Territories on socioeconomic benefits, moving the project forward a notch.

Feb. 23, 2007

2 min read

By OGJ editors
HOUSTON, Feb. 23 -- The Mackenzie Valley natural gas pipeline sponsors have reached an agreement with Northwest Territories on socioeconomic benefits, moving the project forward a notch, reported Imperial Oil Ltd.

The agreement calls for the territorial government and industry participants to jointly finance a $21-million fund to provide job training for northerners. Sponsors include Imperial Oil, ConocoPhillips, Shell Canada Ltd., ExxonMobil Canada, and the Aboriginal Pipeline Group. For the first 10 years, the province and the group will each contribute $500,000/year, including the estimated 4-year construction period, and $250,000/year each after that. In addition, there will be a $500-million federal fund to deal with socioeconomic impacts.

Hearings are expected to conclude in April, Imperial said, followed by a formal report later in the year. The final approval is expected in 2008, with the pipeline scheduled to be in service in 2012.

Because of unresolved aboriginal issues, however, the final cost has not been determined for the 1,200-km pipeline, which would link the Beaufort Sea to the Alberta border. Previous estimates put it at $6.5 billion, but Imperial is expected to provide a revised estimate before the end of March.

Calgary-based Tristone Capital Research Director Chris Theale expects the final pipeline tab to be about $10 billion.