Toll road may aid pipeline costs
SHAWN MCCARTHY // GLOBAL ENERGY REPORTER
August 29, 2008
OTTAWA -- The federal and territorial governments are looking at inviting private-sector partners to build a toll highway up the Mackenzie Valley as a way of opening the North for development and lowering costs for a long-delayed natural gas pipeline.
One day after Alaska gave formal approval to TransCanada Corp.'s bid to build an Alaskan gas pipeline, Northwest Territories Premier Floyd Roland said Canada needs to move more quickly to ensure the Mackenzie pipeline project remains commercially viable.
"We've got to keep the momentum of this project going," Mr. Roland said in an interview yesterday after he met with Prime Minister Stephen Harper in Inuvik.
The federal government has long said it wants Mackenzie to come on stream before the Alaska project, which will deliver larger volumes of natural gas into U.S. markets, through Alberta. Yesterday, Industry Minister Jim Prentice told reporters in Inuvik that he expects Ottawa to have a fiscal arrangement with the sponsors of the pipeline, led by Imperial Oil Ltd., by next spring, when a joint federal-territorial panel reports on the social and environmental ramifications of the project.
Mr. Roland said Canada is "ahead of the game" in terms of the licensing and approval for a northern gas pipeline, compared with Alaska, but that advantage is narrowing.
Among the financial issues that governments and industry must hash out is who pays for the infrastructure - including a road system - required to build the pipeline. The Premier said a public-private highway - much like new tolls roads built in southern Canada - could reduce those development costs. The oil companies are also worried about further regulatory delays once the federal-territorial panel issues its report. That's because Ottawa has ceded responsibility for land- and water-use permits to native groups as part of land claims settlements.
A report released this summer urged the federal government to overhaul the regulatory system in the North to encourage development, but warned that Ottawa will have to work closely with native groups to ensure any changes are consistent with their treaty rights.
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