Canadian Arctic pipeline could face more delays
Tue Sep 13, 2005 2:15 PM EDT
ca.today.reuters.com
By Jeffrey Jones
TORONTO (Reuters) - The schedule for a C$7 billion gas pipeline in Canada's Arctic faces slippage again unless oil companies, native groups and governments can quickly make major progress resolving thorny land-access and regulatory issues, energy executives said on Tuesday.
An official with one of the proponents, Shell Canada Ltd., said he believed it unlikely the huge project could be in service before 2011, especially if public hearings face more delays as appears likely.
The partners, led by Imperial Oil Ltd., must decide when to tell regulators they are ready for hearings into the Mackenzie Valley Pipeline in the Northwest Territories. Then it will be 60 days before proceedings can begin.
"We're currently addressing that just this week, and we'll see what the outcome of the management committee representatives' discussions are," said Ian Kilgour, head of Shell Canada's exploration and production division.
"I would expect that there may be some small delays, but we're still zeroing in on a decision this fall," Kilgour told reporters after speaking to a Peters & Co. energy conference in Toronto.
Hearings for the development, which would ship up to 1.9 billion cubic feet of gas a day to thirsty southern markets, had been expected to begin in late summer. But in July, Imperial asked regulators to put the process on hold, pushing proceedings back to at least November.
It said the partners had not made enough progress solving such issues as spiraling cash demands from communities along the pipeline route in exchange for land access, and a more streamlined regulatory process with timelines. They are also looking for "appropriate" royalty and tax terms.
Those issues had prompted Imperial in April to halt all field work on the 1,350 km (840 mile) pipeline to Alberta from gas fields to be developed on the coast of the Beaufort Sea.
Since then, all parties have been in intensive talks aimed at moving the project forward. The industry partners had hoped to be shipping gas around the end of the decade.
Kilgour declined to predict when the partners may be ready to inform regulators that they are ready for hearings.
"We're having discussions with the leaders of the communities as we speak, so it's very much a day-to-day issue at the moment," he said.
A senior Imperial executive said he believed the partners were "a couple of months or a month or so" away from hammering out solutions to the three sticking points.
But he also declined to comment on whether the public hearings could be pushed into December or early 2006.
"We're at that critical point where we really need to meet arrangements soon for our hearings to proceed," Imperial vice-president and controller Paul Smith said.
He pointed out positive moves in some areas, including Ottawa's July offer to the Northwest Territories to spend C$500 million over 10 years to help cure social and infrastructure problems that may result from the pipeline's development.
"There's an example of good progress. We're now into the heavy lifting of the other components, so I think it could come together," Smith said.
The other partners in the project are ConocoPhillips, Exxon Mobil Corp. and the native-owned Aboriginal Pipeline Group.
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