Terry Halifax
Northern News Services

Inuvik (Mar 29/02) - High costs of natural gas and a California energy shortage renewed speculation of a Mackenzie Valley pipeline, but that price has since dropped significantly.

While some producers in Alaska are questioning whether the Alaska project is still viable at current prices, companies here say the market seems stable enough to keep moving forward.

Hart Searle, spokesperson for the Mackenzie Delta Producer's Group, says there are many factors hinging the construction of a pipeline of this size -- not just price.

"We are optimistic enough and sufficiently encouraged enough from our feasibility study that we will go to the next step," Searle said.

The producer group will now prepare regulatory applications to file with the National Energy Board.

If the project is approved, the decision will then be made to construct a pipeline. Before they make that decision, they need to assess natural gas markets, construction costs, and regulatory and fiscal certainty.

"Pricing scenarios are certainly a key part of the decision-making process, but they are not the only factor," Searle said.

Managing Director for ArctiGas Resources, Bruce Hall says the price has a bearing, but their proposal was based on $3.00 to $3.50 per MCF (million cubic feet).

"Our model works with low gas prices," Hall said. "For us that price works very well."

He says a higher-priced project, such as the one proposed through Alaska, would require higher gas prices to remain viable.