Inuvik (June 23/03) - Now it's time to get it built.

That was the feeling on the floor at the Inuvik petroleum show last week as the oil and gas patch looked to construction of the Mackenzie Valley gas pipeline.

The upbeat mood followed the Aboriginal Pipeline Group's long-anticipated announcement that it has a financing deal in place for its share of the $5 billion pipeline.

"Before, we didn't have a project," said Nellie Cournoyea of the Inuvialuit Regional Corporation. "Now we do."

NWT premier Stephen Kakfwi noted that debate on the pipeline 20 years ago divided the territory deeply.

"This time we are going to do it right."

An elated APG chair, Fred Carmichael, announced the terms of the deal.

It gives the APG one-third ownership of the pipeline without putting up a penny.

"I'm a happy man," said Carmichael. "We've got a good deal."

Few conference delegates disagreed.

TransCanada Pipelines will lend the APG $80 million for its share of the $250 million project definition phase.

In return, TransCanada gets an option to purchase five per cent of the $5 billion project from the producers group: Imperial Oil, ConocoPhillips, Shell, and ExxonMobil.

The company will build an extension of its Alberta system to connect with the Mackenzie Valley pipeline just south of the Alberta/NWT border.

The APG will begin repaying the loan from revenues after the pipeline is built.

If the pipeline isn't built, the APG owes TransCanada nothing.

Two years to build

Regulatory approval of the 1,800 kilometre pipeline will take about three years and construction, two years. On that timeline, gas could begin flowing South from the Delta by 2008.

The producers will file a Preliminary Information Package (PIP) with regulators immediately and a full Environmental Impact Statement (EIS) in about eight months.

The pipeline is planned for an initial 1.2 billion cubic feet/day capacity and eventual expansion to 1.9 billion cubic feet a day.

Timing excellent

The timing for bringing Delta gas into the North American market is seen as ideal.

Economist Peter Miles of the Canadian Energy Research Institute, said by 2010 the production of Canadian gas at market prices will begin to decline rapidly.

With occasional spikes, natural gas prices are projected to remain steady at about $5 per thousand cubic feet through to 2020.

Estimated gas reserves in the Delta total about six trillion cubic feet, with another three trillion cubic feet offshore.

Much of it can be produced for less than $4 per thousand cubic feet.

"That gas is looking pretty good," he said.