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No drop dead date for Mackenzie pipeline, says Shell’s Clive Mather

Canadian Press: No drop dead date for Mackenzie pipeline, says Shell’s Clive Mather

Posted 10 June 2005

By Bill Graveland

CALGARY (CP) – Shell Canada Ltd. is still committed to proceeding with the $7-billion Mackenzie Valley natural gas pipeline in the Northwest Territories but not without clear guidelines from Ottawa, the energy giant’s president and chief executive said Thursday.

“Mackenzie Delta for us is a very, very important project and we are committed to doing it,” Clive Mather told the Calgary Chamber of Commerce.

“But what we went to see is some unblocking of the regulatory processes so we can actually get this thing started again.”

Shell Canada (TSX:SHC), along with its partner Imperial Oil (TSX:IMO) are joined in the pipeline consortium with international energy giants ExxonMobil and Texas-based ConocoPhillips (NYSE:COP).

The group said in late April it was shutting down its “project execution activities,” because private and commercial negotiations between various groups and aboriginal communities along the pipeline route were totalling “into the hundreds of millions of dollars.”

“We’ve had to stop the pre-work because simply we couldn’t afford to carry on burning money at the rate we were,” Mather said following his speech to the Calgary business group.

The decision has at least got the attention of the federal government he said.

“Ottawa has put additional resources on the case and they are working with us to try and move this thing forward,” Mather said.

The pipeline consortium has been working on the project for years and a major milestone was passed last October when the group filed their long-awaited regulatory applications for the project, which would ship natural gas from energy fields in the Far North to southern markets in Canada and the United States.

But there has been little progress since, with the energy companies saying they are being hampered by things well beyond the responsibility of the project, like land-claims issues with native groups.

“At the moment, there are many claims being made by First Nations through the length of the pipeline,” he said.

“We believe those fall legitimately to governments rather than to the economics of the project because if we overload the project the result is certain – it won’t stand up economically and then it won’t get done.”

Last month a second northern aboriginal group filed a lawsuit to try to stop hearings into the proposed pipeline.

The planned pipeline would cut across about 100 kilometres of Dene Tha’ traditional lands, and the native group says it has been ignored in the project’s design and early regulatory process.

The lawsuit seeks a judicial stay of hearings by the joint review panel until the Dene Tha’ voice is heard.

Mather said he expects to spend the summer talking to key stakeholders in the project to see if there is any way to resolve some of the outstanding issues.

Earlier this month, Alberta’s representative in Washington, D.C., Murray Smith, said he thought there was a 60-day window of opportunity to push the project forward.

But Mather said it’s not quite that simple.

“I tend not to get stuck on specific windows,” the Shell Canada CEO said. “I think we have to accept that this is urgent and so the sooner we get going the better.”

“We don’t have a drop dead date. It is an important project but the economics would be enhanced if we could get started earlier than later.”

Shell Canada (TSX:SHC) is one of Canada’s biggest energy companies, with major natural gas operations in Western Canada and off the East Coast, an oilsands business in northern Alberta and a national network of Shell-branded gasoline stations.

The company employed 4,000 people at the end of last year and generated revenues of $11.3 billion and profits of nearly $1.3 billion in 2004.

In trading on the Toronto Stock Exchange on Thursday, Shell Canada shares rose $2.51 to close at $93.60, a gain of nearly 2.8 per cent.

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