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Message: NEB approved plans to build the Mackenzie Valley natural gas pipeline
CALGARY -- The National Energy Board approved plans to build the Mackenzie Valley natural gas pipeline Thursday, putting the fate of the massive project in the hands of the federal cabinet, and ultimately, Imperial Oil Ltd.
The NEB argued the pipeline, if built, could help Canada’s North prosper.
“We looked at how the project would contribute to sustainability in the way it would affect the people, the land where they live, and the economy, now and in the future,” the NEB panel said in a statement. “We recognize that the Mackenzie Gas Project would have much larger and more far-reaching effects than previous developments in the North.”
The regulator’s approval, however, comes with 264 conditions in areas such as engineering, safety and environmental protection. “Conditions are requirements which must be met,” it said in the statement. “The National Energy Board will monitor the project throughout its lifespan to see to it that the operators meet these conditions.” A slew of other permits from various governments and agencies would have to be issued, too.
The federal government must approve the NEB’s recommendation, but NEB rulings are rarely – if ever – overturned.
The 1,196-kilometre Arctic pipeline was first proposed more three decades ago and has been stuck in regulatory limbo since. The NEB’s decision on Thursday ruled on an application Imperial, which is controlled by Exxon Mobil Corp., filed in late 2005.
The Northwest Territories, which expects a windfall of financial benefits, applauded the decision.
“The National Energy Board has given the Northwest Territories an early Christmas present today in issuing a positive decision regarding the Mackenzie Gas project,” Bob McLeod, minister of industry, tourism and investment for the Northwest Territories, said in a statement. “This is an important milestone for a project that could provide significant economic and environmental benefits for the Northwest Territories and for Canada.”
The NEB’s review included 58 days of hearings at 15 locations in Canada’s North in 2006. The hearings were translated into seven languages: English, French, Inuvialuktun, Gwich’in, Dene Tha’, North Slavey, and South Slavey. More than 200 people and organizations participated in the hearings, including two interveners sang songs opposing the pipeline before a NEB hearing in Yellowknife in August 2006. Final arguments were presented in April 2010.
Roughly 40,000 pages of evidence were filed in conjunction with the review.
A separate Joint Review Panel assigned to explore the environmental and social affects of the pipeline gave its conditional blessing at the end of last year. The NEB considered that report in its ruling.
The $16.2-billion pipeline, if built, could ferry 1.2 billion cubic feet of natural gas per day – enough to heat four million Canadian homes in 2009 -- from the Beaufort Sea to northwest Alberta, where it could then be distributed in North America. The project also covers three onshore natural gas fields, a 457-kilometre pipeline to carry natural gas liquids from Inuvik, Northwest Territories, to an existing oil pipeline at Norman Wells, Northwest Territories, and other related facilities.
With regulatory approval sealed, Imperial and its partners must now decide if the $16.2-billion project — Canada’s largest private effort — is worth building.
It comes down to dollars and demand. The world’s supply of natural gas has exploded since the pipeline’s first blueprints were drawn in the 1970s. For example: Canada hosts between 700 thousand cubic feet (TCF) and 1,300 TCF of marketable natural gas — the amount of gas that can be recovered, stripped of impurities, and sold in the market — according to the Canadian Society of Unconventional Gas.
To put that in context, Canada burns about three TCF per year, and exports another three TCF per year. With 700 TCF available, Canada could meet its current consumption and export demand for more than100 years. This estimate excludes a number of natural gas plays that are believed to have enormous potential, including Alberta’s Monteny formation and the Liard Basin, which is west of the Horn River play, among others.
A plethora of natural gas plays have also emerged in the United States. Texas’ Barnett field may hold up to 64 TCF of recoverable gas; Louisiana’s Haynesville may house 109 TCF of recoverable gas; and Pennsylvania and New York’s Marcellus zone could contain 96 TCF of recoverable gas, according to BMO Capital Markets estimates from early 2010.
The Mackenzie Valley line also faces competition from the proposed $30-billion Alaska gas line. That 2,670-kilometre-long line could ship four billion cubic feet of gas per day from Alaska’s Arctic to the lower 48 states beginning in 2018.
Two companies are competing to build the project, and gas producers are negotiating shipping contracts now.
Many observers believe only one Arctic line will be built and the Northwest Territories, and other pipeline supporters, are using that to put pressure on federal lawmakers.
Ottawa pledged to negotiate financial support for the Mackenzie Valley project in January 2009, but nothing has emerged since then.
Those who believe the government should support the private project argue the pipeline an exercise in nation-building, comparable to the Canadian Pacific Railway. The pipeline, these nationalists argue, will give the North an economic link to the rest of Canada in the way the railway tied British Columbia to the rest of Canada. Some also compare it to the St. Lawrence Seaway.
Calgary-based Imperial leads the Mackenzie Valley pipeline consortium. Exxon Mobil, ConocoPhillips, Royal Dutch Shell PLC, and the Aboriginal Pipeline Group are the other partners.
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