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C$16.2 Billion Mackenzie Gas Pipeline Faces New Delay UPDATE: C$16.2 Billion Mackenzie Gas Pipeline Faces New Delay

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OTTAWA -(Dow Jones)- The proposed start date for the C$16.2 billion Mackenzie gas pipeline could be delayed yet again, after a key regulatory review for the troubled project was pushed into next year.

A joint federal and provincial panel assessing the pipeline’s environmental and social impact is now expected to publish its report next year, project leader Imperial Oil Ltd. (IMO) said. The panel’s report, which had been expected in October, is needed before Canada’s National Energy Board can make its regulatory ruling.

“We understand at this point that we’re looking at a delay into 2009,” Imperial spokesman Pius Rolheiser said Friday, adding that the panel hasn’t informed the company directly. “While we recognize that the Joint Review Panel has a significant task, we don’t understand the reasons for this delay.”

However, the Joint Review Panel never gave an official publication date for the report, according to the Northern Gas Project Secretariat, a body assisting the panel with the review process.

“When the public hearings ended in November last year, the chairman at the time didn’t set a specific date” for publishing the findings, said Annette Bourgeois-Bent, the secretariat’s communications manager.

“He said in response to questions that it will not be completed in 2008 but he hasn’t given any other date.”

She added that the panel’s task was “monumental,” and that it needed to pore through more than 11,000 pages of transcripts.

This is the latest in a series of setbacks for the massive pipeline, which would connect natural gas from Mackenzie Delta on the Beaufort Sea coast to Canadian and U.S. markets, transporting up to 1.9 billion cubic feet a day. The project’s proponents are still trying to hammer out fiscal and commercial terms with the federal government, and negotiate right-of-way agreements with a number of First Nations groups whose lands fall under the proposed pipeline route.

The pipeline’s start date already has been pushed back several times, most recently to 2014, and the deferred report could delay this to the following year.

“We said the startup would be no earlier than 2014,” Rolhesier said. “It’s difficult to say with any certainty what impact this will have but … it’s not positive.”

He added that the pipeline’s proponents are advancing on non-regulatory aspects, and had made “significant progress” with several First Nations groups since the start of the year. They are also continuing their dialogue with the federal government on proposed fiscal terms, he said, but declined to offer further detail.

Imperial’s partners are Royal Dutch Shell PLC (RDSA), ConocoPhillips (COP), ExxonMobil Corp. (XOM) and the Aboriginal Pipeline Group.

-By Hyun Young Lee, Dow Jones Newswires; 613-237-0669; [email protected]

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  05-16-08 1431ET
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