INUVIK - Now it's official: the federal cabinet has signed off on the Mackenzie Gas Project.

The Mackenzie Gas Project has officially been approved by the Government of Canada, but those proposing to build it need some assurance of a workable federal fiscal framework before proceeding with crucial development plans for the project, say Imperial Oil and the Aboriginal Pipeline Group. - NNSL file photo

On Thursday, the National Energy Board (NEB) formally granted the proponents, led by Imperial Oil, a key certificate for the 1,200 km gas line. The decision required the blessing of cabinet before it became official.

With that in hand, the pipeline backers must now overcome an equally important hurdle: securing federal fiscal support for the $16.2 billion pipeline.

In December, the NEB approved the long-delayed pipeline on the condition that Imperial Oil and its partners decide by the end of 2013 whether to build the gas line.

But the proponents are waiting on some assurance of a workable federal fiscal framework before proceeding with the three years of work required to make a decision to construct, said Pius Rolheiser, spokesperson for Imperial Oil.

"Given sufficient confidence in a fiscal framework, the next step would be to re-initiate project activities like restaffing the project team, resuming engineering work, permitting work, field work," said Rolheiser.

Bob Reid, president of the Aboriginal Pipeline Group – which stands to acquire a one-third equity stake in the pipeline – put it more urgently.

"It's absolutely contingent on arriving at a fiscal arrangement with the federal government," said Reid.

The pipeline consortium – a group that also includes Exxon Mobil Corp., ConocoPhillips and Royal Dutch Shell PLC – will now seek to reopen talks with the feds on a fiscal framework, confirmed Rolheiser.

"Our intent now would be to re-initiate our discussions," he said.

Talks with the federal government ceased a year ago at the request of former Environment Minister Jim

Prentice, according to Reid.

"(Prentice) said, 'Come on back when you get your certificate and then we can restart the discussions,'" Rolheiser said.

Federal cabinet oversight of the pipeline has since been transferred to Indian and Northern Affairs Minister John Duncan.

Meeting the NEB's 2013 deadline for a decision to construct will prove difficult, Rolheiser reiterated on Thursday.

"There's actually over 6,000 individual project permits that we would require in hand before we make a decision to construct, so achieving all of that within the timeframe that's been stipulated will be very challenging."

Merven Gruben, mayor of Tuktoyaktuk and owner of E. Gruben's Transport, said residents of the Mackenzie Delta region were anxious in the weeks leading to cabinet's approval.

"There's quite a few of us, the leaders up here, who are wondering why it's taking so long," said Gruben Wednesday, a day before cabinet's approval was announced. "We thought this was going to happen in January."

But whether the federal government is prepared to provide money to the pipeline backers is another story, said Doug Matthews, a Calgary-based oil and gas industry analyst.

Keeping the talks secret has prevented the proponents from establishing public support for the pipeline, he said.

"The taxpayer has absolutely no idea what Imperial Oil is asking for or what the feds were offering, and in the absence of that information, there was no, that I can say, broad-based support for government funding for this project," said Matthews.

"That seems a shame, because it's an important project for the North. But when was the last time you heard a federal cabinet minister extolling the virtues of the Mackenzie Gas Project? They've been leaving this for Bob Reid to wander around from one conference to another talking up APG and the Mackenzie Gas Project."

Gruben, whose company has expanded and acquired equipment in anticipation of the pipeline, is more hopeful.

"I think it's going to happen," he said.

The GNWT has been a vocal proponent of federal financial support for the pipeline, a call being echoed by the Aboriginal Pipeline Group.

"This is truly a nation-building project, and other nation-building projects have received some form of federal support, such as the St. Lawrence Seaway, Hibernia and in fact the original TransCanada pipeline," said Reid.

"The US government has stepped up with $18 billion worth of loan guarantees for the Alaska (pipeline) project. There is a role for the federal government to play to keep the playing field level between Mackenzie and Alaska."

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