CALGARY, Alberta (Reuters) - A C$7 billion Canadian Arctic gas pipeline will likely go ahead, despite costly delays in finalizing land access deals with native communities, Exxon Mobil Corp.'s (XOM.N: Quote) president said on Tuesday.
The Mackenzie Valley pipeline, which would carry badly needed natural gas supplies to southern markets from the Beaufort Sea coast, has bogged down over access and benefits issues and the partners' inability so far to get a royalty and tax deal.
"My expectation is the Mackenzie pipeline will go forward. I think there's been good progress made in dealing with a number of long-standing issues ... regarding aboriginal claims and benefits -- the compensation that they expect," Exxon Mobil President Rex Tillerson told reporters after a speech to business and government officials in Calgary.
Exxon Mobil is a partner in the pipeline proposal and majority owner of the project's leader, Imperial Oil Ltd. (IMO.TO: Quote) Tillerson is slated to take over as chief executive of Exxon when Lee Raymond retires at the end of this year.
Imperial and its partners halted physical work on the pipeline last April, saying they needed to address spiraling cash demands from aboriginal groups along the Northwest Territories route, and to find ways to cut red tape.
The companies have said they expect to tell regulators this month if they are ready to go ahead with hearings. If they are, proceedings could start two months later.
Tillerson lauded the Canadian government for its move last summer to offer northern communities C$500 million over 10 years to address social issues, alleviating pressure on the oil companies to provide social funding.
"It's a long process and there are lots of issues that have to be addressed, but we continue to make good progress and my expectation is we'll ultimately get across the finish line with this thing," he said.
The line would carry up to 1.9 billion cubic feet of gas a day to Alberta's pipeline network, where it could be routed to numerous Canadian and U.S. markets.
The other partners are Shell Canada Ltd. (SHC.TO: Quote), ConocoPhillips (COP.N: Quote) and the native-owned Aboriginal Pipeline Group.
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