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"Prentice awaits input over aid for Mackenzie"

Prentice awaits input over aid for Mackenzie
'It's really in the hands of the proponents,' Industry Minister says
September 22, 2007

BANFF AND CALGARY -- Imperial Oil Ltd. still hasn't restarted negotiations with Ottawa over potential federal aid for the beleaguered $16-billion Mackenzie Valley natural gas pipeline project.

"We are awaiting a response from industry," Jim Prentice, federal Industry Minister, said in an interview in Banff Thursday night before his first major speech in his new job.

"It's really in the hands of the proponents. I know that they have been calibrating their costs and discussing the project."

Mr. Prentice stressed that he stands by a June speech in which he called for the Mackenzie pipeline proposal to be "reinvented" if it is to receive billions of dollars in financial support from Ottawa. He suggested Imperial should cede some control to other partners if it is not pleased with all aspects of the project's profit potential; TransCanada Corp. is already involved in Mackenzie and is seen as being a leading contender to take over.

Imperial, the project's main backer, had previously discussed financial breaks such as lower royalties and taxes and help with some infrastructure from Ottawa. The former Liberal government had said Imperial in 2005 requested aid valued at $1.2-billion. Imperial spokesman Gordon Wong said the company was for now focused on completing the regulatory hearings for Mackenzie, and wouldn't comment on the status of negotiations over potential federal aid.

The 1,200-kilometre Mackenzie pipeline would carry gas in the Mackenzie Delta near Inuvik to northern Alberta.

Exxon Mobil Corp., which controls Imperial, said recently that the project is on track as the proponents continue through the lengthy regulatory process. However, Rex Tillerson, Exxon chief executive officer, said he didn't have certainty about the $16.2-billion cost estimate for the project that was made public by Imperial Oil in March, raising the prospect that its price could rise further.

In an interview Wednesday, outgoing Northwest Territories Industry Minister Brendan Bell, who is not standing in the forthcoming territorial elections, said that while the regulatory process for Mackenzie has "dragged on longer than anyone could have imagined," there was "light at the end of the tunnel," given that the National Energy Board will make its regulatory decision by the end of 2008.

"Despite the delays, the question of whether the project goes ahead will still come down to if it's in the economic interest of the companies involved and if they're prepared to make it go," he said. "I certainly hope they are, as there is a bigger picture at stake here - the project will play a key role in meeting the energy needs of Canada and the U.S. and would be absolutely uplifting for the Northwest Territories."


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