Jason Unrau
Northern News Services
Wednesday, March 14, 2007

YELLOWKNIFE - As the projected cost of building the Mackenzie Valley pipeline skyrockets to $16.2 billion, Industry, Tourism and Investment Minister Brendan Bell says it's time for the federal government to step up to the plate.

"We knew the costs had risen but the magnitude of the increase surprised even us," Bell said on Monday.

The lead project proponent Imperial Oil's original estimate for the 1,200km gas pipeline and related infrastructure was $7.5 billion.

The updated estimate submitted to the National Energy Board included project costs of $3.5 billion for a gas-gathering system, and $7.8 billion for the Mackenzie Valley Pipeline. In addition, the estimated cost of the development of anchor fields is $4.9 billion.

While Bell said he does not favour subsidies from the federal government for pipeline proponents Imperial, ConocoPhillips, and Shell to construct the project, federal support for the Aboriginal Pipeline Group in the form of gas shipping and loan guarantees was necessary.

"We will need to see some government support for the APG," he said, adding infrastructure investments in the territories from Ottawa- in particular the construction of an all-weather road through the Mackenzie Valley - would also help advance the pipeline's construction. "And provide a lasting benefit to the people of the North beyond the pipeline."

For the APG, a consortium of aboriginal groups with a one-third stake in the pipeline portion of the project, its future profits will hinge on additional gas suppliers who will use the pipeline to get their gas to market, over and above gas from Imperial, ConocoPhillips and Shell anchor fields.