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Social justice group airs concerns over gas project

Guy Quenneville
Northern News Services
Published Wednesday, March 31, 2010

SOMBA K'E/YELLOWKNIFE - Yellowknife-based social justice coalition Alternatives North publicly aired concerns about the economic viability of the Mackenzie Gas Project during a cross-examination held by the National Energy Board (NEB) at Northern United Place on Monday.

NNSL photo/graphic

Kevin O'Reilly, a member of Yellowknife-based social justice coalition Alternatives North, cross-examines representatives of the Mackenzie Gas Project proponents during a hearing held by the National Energy Board on Monday at Northern United Place. - Guy Quenneville/NNSL photo

Earlier this year, the coalition succeeded in petitioning the NEB to require the proponents of the Mackenzie Valley pipeline, led by Imperial Oil, to file updated estimates on the project's timeline and the natural gas market.

According to that revised estimate, demand for natural gas will increase in the coming years but the proponents will not be in a position to make a decision to construct until 2013, with operation of the $16.2 billion pipeline not beginning until at least 2018.

What's missing from the proponents is a revised cost estimate for the pipeline, said Kevin O'Reilly, a member of Alternatives North, who raised the point, along with several others, during the hearing Monday, which was attended by of approximately 30 people.

"The proponents still have not filed any updated costs for the project. The last costs that are available date from March 2007," O'Reilly told Yellowknifer. "The NEB did not require the proponents to file that information but they could have done it themselves voluntarily. They chose not to."

An up-to-date building cost estimate would help the NEB in its assessment of the project's economic viability, due this fall, he added.

"NEB needs to make a decision on whether the project is economically feasible or not. Without updated costs, without signed contracts for people to actually ship gas through the pipeline, without a fiscal framework, I think the NEB is put in a very difficult situation of trying to assess whether this project is feasible or not."

Monday's hearing also provided O'Reilly an opportunity to cross-examine Heather Marreck, Imperial Oil's commercial manager for the pipeline, on whether a fiscal agreement between the proponents and the federal government is necessary for the pipeline to actually proceed.

In October, the National Post, citing unnamed sources, claimed a proposed financial assistance package was rejected by federal cabinet, causing many to wonder whether the Government of Canada's support for the project has waned in the wake of doubts about the project's economics and competition from recent shale gas discoveries in both the United States and Canada.

"While the fiscal framework will have an impact on the economic viability of the field development, it will not have an impact on the economic feasibility of the pipeline," said Marreck.

Gerry Angevine, president of Angevine Economic Consulting Ltd. - the company that prepared the requested update on natural gas markets - was also on hand to answer O'Reilly's questions about whether MGP gas can compete with shale gas, which O'Reilly said is cheaper to produce.

"What this market study indicates is that there is room for gas from the Northern frontiers in spite of increasing shale production and (liquefied natural gas) being made available to be used as well," said Angevine. "It does not indicate whether Mackenzie gas, or Alaska gas for that matter, would be competitive. That would be up to the producers at the time to determine."

The NEB will hear final arguments on the pipeline in Yellowknife beginning April 12 and ending April 17. The proceedings will then move to Inuvik on April 20 and continue until April 24, if needed.

As Sarah Kiley, a communications officer with the NEB, previously explained to Yellowknifer during the final argument process, "Anyone who's participated in the hearing could come in and make their case. Even if you're in total agreement with the project, this is also an opportunity to make any last comment you'd like the panel to consider."

The proponents previously cited regulatory delays, lack of a fiscal agreement, project restaffing requirements and seasonal constraints as the primary reasons for the project's four-year delay.

The Joint Review Panel's report on the project - several years late - delayed the regulatory proceedings of the NEB, which suspended its hearings into the pipeline in late 2007 while it waited for the JRP report, which was released in December of last year.

Depending on whom you talk to, that fact was either humorously or depressingly underlined when panel chairman Ken Vollman pondered whether Angevine and Marreck, who previously participated in hearings, should be sworn in once again given the amount of time since their last appearance.

"I'm not sure what the protocol is ... but with the length of time that has expired, perhaps it would be a good time to re-swear in the witnesses," said Vollman, drawing laughs from some in the audience.

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