SOMBA K'E/YELLOWKNIFE - In the final edition of this feature, News/North canvasses opinions of two people - Kris Shaw, an economist with the Conference Board of Canada, and Kevin O'Reilly, a member of the Yellowknife-based social justice group Alternatives North - and asks them to place themselves in one of two camps.

In the first camp are those who remain convinced that, no matter the challenges, the Mackenzie Gas Project will see the light of the day.

In the second camp are those who are a little more skeptical of the project's chances and wonder if indeed Northerners will ever see the day when natural gas from the Mackenzie Delta flows south.

Kris Shaw

I'd like to say we fall in between those. Probably closer to the matter of "when."

It's an impressive project and it has great potential and economic benefits for the territory - not just the Northwest Territories but the Yukon and Nunavut, too, if workers from those areas are able to commute.

We recognize that there are several risks to this project. Natural gas prices, in our opinion, are nowhere close to where they need to be to make this viable and we don't see that situation changing for about 10 years. We don't think it's reasonable to expect natural gas to be flowing down this pipeline until the next decade.

We have it in our (recently released NWT economic) forecast, but it's pushed back to give time for natural gas prices to recover because right now supplies are high...

I think (our position has) been corroborated a little bit by some of the comments coming out from the proponents - their plans to avoid making a decision for several more years as long as they can and they're wanting the National Energy Board to give them a bit longer...

They realize, too, that prices are not anywhere close to where they need to be and why would you commit now when you know it's going to be several years before you'll start to see the signs that this market has strengthened to the point where you can start breaking ground?

News/North: Where does shale gas fit into this?

Shaw: Non-conventional shale deposits are really beginning to be a factor... We see this is a downward force, a downward pressure on prices for the foreseeable future. It won't be something that will go away very quickly and it will impede the rising gas prices because there's so much supply. We see that as probably the biggest risk to the project.

In our forecast, we have construction beginning in the later half of this decade.

News/North: The Alaska Pipeline Project - threat, or overblown threat?

Shaw: Definitely a threat. I wouldn't call it overblown. It's yet to be seen whether that project will go ahead, too, of course, but with another Arctic pipeline in the mix, it's not certain that there's enough wherewithal for both, especially because some of the companies involved are proponents of both projects. That's something that needs to be considered - if support for one of those projects will begin to wane given the progress on the other. If the Alaska pipeline moves at a quicker pace, it could have the result of dampening the optimism or interest in the Mackenzie pipeline.

News/North: What would happen if the construction of both projects overlapped?

Shaw: That would be a very interesting case. You would definitely see wages skyrocket. Both projects require huge numbers of workers, and I would see that as having a real impact on the labour market in terms of wages. It would be a good time to be a construction worker in the North...

News/North: Would you say that the Mackenzie Gas Project has missed a window of opportunity?

Shaw: I don't think it's missed a window of opportunity. The big customers of the gas would be the Alberta oil fields, the oil sands, and there's a lot of growth potential there still. A lot of that development was interrupted in the last couple years because of the credit crisis and so many companies retreated in their investment profile.

Kevin O'Reilly

I don't think this project is going ahead any time soon for a variety of reasons. I guess probably the biggest is the shale gas now available. It's much cheaper than natural gas from the Mackenzie Delta. And it's having a huge impact on the (natural gas) market...

...there's abundant quantities of shale gas much closer to markets than gas from the Mackenzie Gas Project that don't require the sort of capital costs associated with building the MGP.

News/North: Where do you see the Alaska Pipeline Project fitting into this. Is it a threat, or is it overblown?

O'Reilly: I'm not sure it's going to go ahead any time sooner, either, so I'm not sure it's really a threat. I just think that the world has changed with regard to natural gas because of shale gas.

News/North: Energy projects have to happen within a certain window. The pipeline has been in the works for a number of years - a number of years more than the proponents probably would like. Do you think that there was a time when the Mackenzie Gas Project was more economically feasible, and that that window has (elapsed)?

O'Reilly: The proponents had never made a firm decision to proceed with the project... The most recent schedule doesn't even show them making that decision until three or four years from now. This project has never been certain. They've always been fishing for subsidies from the federal government, from the taxpayers of Canada. And because they perhaps weren't able to secure those, that might be one of the other reasons why this is not proceeding.

News/North: Are you saying that you're seeing signs that the proponents are not having any luck securing fiscal support for the project?

O'Reilly: Sure. Absolutely. The federal government has lost confidence in this project. They've closed the Mackenzie Gas Project offices here in Yellowknife. They've closed the Northern Gas Project Secretariat office in Yellowknife.

News/North: The secretariat office - that was a very task-specific office. That was meant to support the Joint Review Panel, and now that - by all appearances - the JRP's role is finished, does it not make sense that that office is closed?

O'Reilly: As I understand it, that particular office was to remain open during the so-called regulatory phase of the project when land and water boards were going to be holding hearings looking at specific land use permit applications, water licensing. As I understand, there was to be an ongoing office to help co-ordinate the regulatory review phase a well. Clearly, that's not proceeding.

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