Yellowknife (July 12/04) - The cost of building the Mackenzie Valley pipeline is now estimated at $5 billion.

The project's costs were previously estimated between $3 billion to $4 billion.

The increases in costs are not so much an aspect of increasing construction and operational costs as a reflection of a better understanding of the project itself, said producers group spokesperson Hart Searle.

Forty per cent of the pipeline route has been changed, either through community consultations or simply through more refined engineering techniques, said Searle.

"Cost projections for steel have gone up quite appreciably in the last little while, primarily because of the industrialization of China," said Searle.

But the primary increase in costs has come about due to a more detailed assessment of project logistics, said Searle.

The pipe will now have 50 per cent greater capacity, a natural gas liquids line will be built and a natural gas liquids facility will be built in Inuvik.

Regulatory conditions will also add to the cost of building the pipeline.

"We also now have a much better idea of the number of camps required, the number of access roads and other logistical details we didn't have a year ago," said Searle.

The pipeline proponents will have to decide if the project is feasible, said Searle.

"It's fair to say we will have a lot of work to do to make the project feasible," said Searle.

The pipeline producers' spokesperson says it is "absolutely" more expensive to operate in the North.

"The geology, the seasonality and the costs of moving equipment all figure into the process. We have to realize that with the Mackenzie Gas Project we are in a frontier area. Ask anybody if its more expensive to work in the North. The answer is yes," said Searle.