This seems to be good news, but the underlying keys here are: Rising costs, costs due to the rising price of crude; these rises are directly linked to the *drive* to construct the pipelines that are ultimately needed for the continued growth of the Athabasca Tar Sands region. Two, as indicated, part of the reasoning against the MGP is the region of BC's Northeast corner perhaps containing vast reserves previously unknown. If this gas is able to be put on line, not only could this make the MGP a plan for a later day, it could be built up faster and that in turn could *speed up* the energy requirements for expansion in the tar sands.
Finally, as always, the ploy of pushing the idea that the Alaska Highway is in "competition" with the MGP will continue to be used to create further tax breaks, possible subsidies, etc. The pipelines, as far as the needs of the Albertan extraction grid are concerned as well as the "needs" of the over-all industry, will both ultimately be called upon but the order may switch up. The total energy requirements of tar sands development includes a level of natural gas that cannot be supplied by one pipeline over the other-- both (along with new coal plants and perhaps nuclear power plants) will be required, and the materials-- correctly identified as currently extremely difficult to bring aboard the project-- will likely land in the Container Port being constructed in and around the Central BC Coast town of Prince Rupert before transport across to Northern Alberta.
What is good news is not always good news.
--M
Mackenzie Pipeline or Pipe Dream?
Grand plan for Alaskan gas mired in uncertainty
Ed Struzik, Edmonton Journal
Published: Sunday, July 06, 2008
In the summer of 2001, Northwest Territories Finance Minister Joe Handley was sitting on the banks of the Mackenzie River betting $50 that a multibillion-dollar pipeline transporting Arctic gas up the 1,200-kilometre-long valley would be built before Alaska could figure a way of piping gas from its fields in Prudhoe Bay.
Like executives from Imperial Oil Ltd., which had a vision for the all-Canadian project, Handley was so confident of the prospects of success, he suggested 2007 was not an unrealistic date for completing the project, estimated at $4 billion.
That was then. This is now.
Now, after a term as the N.W.T. premier, Handley is taking time at his cabin outside Yellowknife to ponder a more lucrative future outside of politics.
The way things have been going lately, he will not be collecting on his bet any time soon.
The Mackenzie Valley project is no longer projected to cost $4 billion, or the $7 billion it was pegged at when Imperial and the pipeline consortium made the first regulatory applications in 2004.
The price is now $16.2 billion and rising.
Today, no one is placing bets on when the gas will start flowing up the valley. The odds are on whether gas will ever flow along a Mackenzie Valley route, at all.
Long dismissed as too expensive, the rival plan to bring huge reserves of natural gas from Prudhoe Bay through the Yukon and northern British Columbia is gaining momentum.
If an Alaska Highway pipeline goes ahead anytime soon, it will delay or possibly kill the Mackenzie Valley proposal.
If that happens, most of the more than $100 million invested so far in research, training, socio-economic agreements, negotiations and the regulatory review process will have been wasted.
"This is a mess," said University of Alberta energy expert Andre Plourde.
"A nightmare," according to Doug Matthews, a Calgary-based energy consultant who was director of minerals, oil and gas for the N.W.T. when the pipeline was first proposed.
"Worst-case scenario? The Mackenzie Valley gas pipeline will not be built," said Rob Huebert, an Arctic expert and associate director of the Centre for Military and Strategic Studies at the University of Calgary.
Publicly, the companies behind the Mackenzie Valley pipeline consortium -- Imperial, Shell Canada, ConocoPhillips and the Aboriginal Pipeline Group (APG) -- are trying to be optimistic.
They say negotiations with northern aboriginal groups for access and benefits agreements are progressing nicely. So too, they say, are discussions with the federal government to get a fiscal framework for the project in place.
But the latest in a long series of setbacks is clearly testing their patience and, perhaps, their resolve.
Told last fall that the Joint Review Panel report looking into the environmental and socio-economic impacts of pipeline development would be ready sometime around now, the pipeline consortium recently learned, through unofficial channels, it won't be out until sometime in 2009. If that's the case, the earliest date gas would start flowing south is 2015.
"All I can say is this is not a welcome development," said Pius Rolheiser, spokesman for Imperial Oil.
Rolheiser, of course, is just doing his job being so polite. The reaction in Imperial's boardroom was undoubtedly a lot more salty.
In the eight years since the idea of a Mackenzie Valley pipeline was revived, virtually everything that could go wrong has gone wrong. Land claims disputes, aboriginal ownership issues, court challenges, rising costs, competing proposals and regulatory delays have slowed the process to a glacial pace.
So, too, has the failure of three different federal governments to take the bull by the horns and lay out in clear and certain terms where Ottawa stands on royalties, taxes, and infrastructure support for the project.
The fact that no government has resolved a long list of environmental and socio-economic issues hasn't made it easy for the Joint Review Panel either.
If built, the Mackenzie Valley Gas Project would carry about 1.9 billion cubic feet of gas per day. That's enough to satisfy most of the additional energy demands required by Alberta's booming oilsands operations in ten years.
Things were actually looking pretty positive for the project back in 2002 when Handley and others were suggesting the 2007 target date.
As promising as the start was, it would be another two years before the pipeline consortium made its application to the National Energy Board.
Doug Matthews says the first mistake was made by Imperial Oil when it failed to recognize the value the Aboriginal Pipeline Group would bring to the table if it were given an ownership stake in the project. Representing aboriginal groups from across the N.W.T., 30 northern aboriginal leaders formed APG in the hopes of maximizing ownership and benefits from the pipeline and to support greater independence and self-reliance among Mackenzie Valley residents.
"Given the fact that Imperial had been in the North since the 1920s, one would have thought they'd find a way of arranging for aboriginal equity in the project very quickly," Matthews said. "But that didn't happen. They insisted on the APG coming up with all the money required to give them a stake. It was a lot of money they didn't have. That really slowed things down."
In the meantime, continued uncertainty about the regulatory regime hampered the consortium's ability to get hundreds of permits needed to collect field data.
Overwhelmed and unable to resolve issues that were outside its control, the consortium threw in the towel in 2005, taking a six-month breather. As it turned out, it was time it couldn't afford.
Given the torrid pace of energy developments in northern Alberta, the cost of manpower, equipment and steel was quickly going through the roof. Forced to revise its cost estimates, the consortium had to go back to the National Energy Board in early 2007 with the new, eye-popping $16.2-billion price tag.
If all this weren't bad enough, Alaskan producers ConocoPhillips and BP PLC added a nightmarish subplot to the story last month by unveiling a $25-billion proposal to rival TransCanada Corp.'s plan to build a pipeline from the North Slope of the state to the lower 48 states.
Worse still for the Mackenzie pipeline interests, the announcement came on the heels of a report that suggested the Horn River area of northern British Columbia could hold up to 50 trillion cubic feet of natural gas. That's more gas than is now recoverable from the entire North Slope. It's also gas an Alaska pipeline could tap into.
If an Alaska Highway pipeline were built any time soon, most experts believe it would delay or kill the Mackenzie project. There simply isn't enough labour, steel and equipment to build two pipelines at the same time.
Joe Handley admits he's sorely disappointed with all that has transpired over the last seven years, putting much of the blame squarely on the federal government for not being more forthright on royalties, taxes and infrastructure.
"The fact is no government in Ottawa, especially a minority government like this one, wants to be seen giving any kind of break to Imperial or Exxon or any other energy company," he said.
http://www.canada.com/calgaryherald/news/calgarybusiness/story.html?id=2...
