Alaska pipeline steals the show
Guy Quenneville
Northern News Services
Published Monday, June 22, 2009
INUVIK - The ninth Inuvik Petroleum Show just couldn't catch a break.
Last year, attendees of the annual oil and gas trade show - though high on news that BP Energy had bid more than $1 billion for a parcel of offshore land in the Beaufort Sea - operated under the shadow of the Joint Review Panel, whose report on the environmental and socio-economic impacts of the $16.2 billion Mackenzie Gas Project (MGP) was still nowhere to be seen.
Despite a new December release date for the report, attendees this year were talking about another perceived roadblock to the project: the competing Alaska pipeline that will stretch approximately 2,737 km from Alaska's North Slope through the Yukon and northeastern British Columbia to the B.C.-Alberta border.
Last week, the U.S. government agreed to increase the loan guarantees to the pipeline proponents, TransCanada Corporation and ExxonMobil, to $30 billion from $18 billion.
Members of the GNWT, including Inuvik-born Premier Floyd Roland, were on hand at the petroleum show to address industry concerns about the Alaska project.
"We're closer to (the JRP) decision than we've ever been in our history, and yet it still feels so elusive," said Roland. "We know that the Mackenzie Gas Project, from a regulatory standpoint, is still ahead of the Alaska line, that the MGP is still on track to be constructed first.
"But that didn't take away that sinking feeling last week when we heard that another decision has been made to advance the Alaska project. While it appears that the Alaska pipeline is making slow but steady progress, the Mackenzie Gas Project appears to be frozen, not just in the ground but in red tape."
That being said, even with the JRP delay, the MGP is still on track to be built first, said Randy Ottenbreit, the MGP development executive for Imperial Oil, which, with ConocoPhillips, Shell Canada, ExxonMobil and the Aboriginal Pipeline Group (APG), has invested between $700 million and $800 million on advancing the project so far.
According to the original pipeline timeline devised in 2007, the MGP was slated to begin construction in 2014, but "we have not issued a revised schedule or timeline for the MGP," said Ottenbreit.
"Part of it is that we're at a stage of the project where we're dealing with some more near-term uncertainty on the regulatory side that we'd like to get a better handle on before we adjust our projections."
Construction of the pipeline will require 7,100 workers, said O.D. Hansen, manager of communications for the APG.
In the meantime, Northern-based businesses which have invested money and equipment in preparation for the pipeline that will likely suffer the most from the current lag in exploration in the Mackenzie Delta, said Brendan Bell, former minister of industry, tourism and investment.
"It's really quite a site to behold," said Bell of the equipment-strewn industrial area of Inuvik, which he toured with Roland Wednesday morning. "There are some small companies that are way out on the limb that have made some investments in the past to be ready for this project. Those are the companies of this region that we need to be worried about and, should this project go away, be the most impacted."
Earlier this year, MGM Energy - which spent about $70 million drilling three wells north of Inuvik last winter - announced it will significantly scale back its activities next year, probably drilling two wells on Inuvialuit owned lands but with much less staff.
For Inuvik company Northwind Industries, which builds roads and maintains rigs for MGM, MGM's drilling activities in 2008 accounted for approximately 75 per cent of revenue that year, said Marty Verbonac, logistics manager for the company.
"If they didn't come on board, there would have been absolutely nothing. They were the only show in town for the last several years," said Verbonac.
"It sort of takes me back to the early 1980s when the arse fell out of the oil industry and they shut down all the exploration in the Beaufort Sea," said Inuvik Mayor Derek Lindsay. "You could have shot a cannon down main street any day of the week."
Given the reduced amount of work available, companies like Northwind may be forced to issue layoffs, Lindsay added. Verbonac said his company usually has to turn people down during a busy season.
"There's only so much work to do," he said. "Actually, we had a lot of calls Alberta, guys looking for work because it's slow down south."
Total attendance at the trade show fell this year to approximately 600 from 669 last year, with the number of exhibitors booths down to 105 from 113.
"I had a feeling that it was going to be down this year, just because of the economy and the way the MGP has stalled," said Lindsay. "A lot of people sort of lost faith or hope in the system and backed off from participating in this year's petroleum show."
The declining participation and the delays of the JRP have cast serious doubts about the prospects of a tenth petroleum show.
"I'm hoping we have a tenth but this December, if the JRP comes out with anything, that will sort of (determine) whether we have show number 10," said Lindsay.
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