Prentice reviewing Mackenzie Valley pipeline financial plan
Jon Harding, Financial Post Published: Sunday, December 16, 2007
The proposed pipeline would run through the Mackenzie Valley.HO/AFP/Getty ImagesThe proposed pipeline would run through the Mackenzie Valley.
CALGARY -- Canada's Industry Minister Jim Prentice is reviewing a financial plan submitted to him Friday by the backers of the $16.2-billion Mackenzie Gas Project.
Following meetings in Calgary with the project's key participants, Mr. Prentice would not detail the fiscal package but said it would be reviewed and analyzed as expeditiously as possible.
Projects proponents led by Imperial Oil Ltd. have been in talks with Ottawa for a year to try to hammer out fiscal terms for the giant, 1,220-kilometre pipeline and gathering system that could deliver as much as 1.9-billion cubic feet of natural gas per day from fields in the Mackenzie Delta of the Northwest Territories to the Alberta hub and onwards into the North American market.
While regulatory hearings have wrapped up, the project has stalled as a result of cost increases and a failure to reach a fiscal deal with the government. Imperial has at times in the past looked for financial help from Ottawa to help make the project economic.
In recent weeks, the Financial Post reported the producer partnership of Imperial, Imperial's parent Exxon Mobil Corp., Conoco Phillips and Royal Dutch Shell would be prepared to hand control of the pipeline over to TransCanada Corp., Canada's largest pipeline company, which has financially backed the project's fifth partner, the Aboriginal Pipeline Group, an aboriginal enterprise.
TransCanada would take the lead with 60% ownership, with the rest going to the APG, sources close to the project told the Post.
That structure, under which the project and its tolling system would be regulated by the National Energy Board, was preferred in the eyes of Ottawa based on comments made by Mr. Prentice last summer.
Under that project structure, sources said Ottawa would be asked to assist via loan guarantees, guaranteed shipping commitments or other breaks.
Mr. Prentice's statement Friday said the Government of Canada has no interest in owning any portion of the project or "in subsidizing petroleum companies.
"It must be a private sector investment, driven by commercial considerations," he said.
"It must result in tangible benefits for northerners and Canadians in general. Participation of the Aboriginal Pipeline Group must remain an important aspect of the project."
TransCanada Corp. CEO Hal Kvisle told reporters last week that his company taking the lead role is just one in a range of options that had been discussed.
Mr. Prentice and representatives of the project's producer backers could not be reached yesterday, nor could TransCanada.
