Literally for decades, major energy companies have been trying to build a massive pipeline from natural-gas fields in Canada’s far north to the oil-and-gas heartland of Alberta. The Mackenzie Valley Pipeline project would run 1,220 kilometres (750 miles) not only to bring gas from the Mackenzie Delta on the Arctic Ocean to market, but also to fuel massive expansion in Alberta’s oilsands.
The project would employ thousands of people in depressed northern communities, particularly Aboriginal ones, and native bands would stand to make small fortunes in exchange for the right to lay pipeline across their land. A significant sticking point has been in figuring out how to cushion all the negative effects of sudden wealth and cultural mixing on towns and reserves that have historically been extremely poor and isolated.
Environmentalists are worried the project itself would disrupt wildlife habitats (the Mackenzie Delta is close to the U.S.’s Arctic National Wildlife Refuge, and the concerns are similar) and encourage yet more exploration and drilling in the Mackenzie Delta. Not to mention that much of the gas would travel down the pipeline only to be burned the service of extracting more oil in Alberta.
In the 1970s, when the project was first proposed, some people called it the largest project in the history of free enterprise. The price tag more than doubled from $7.5 billion to $16.2 billion in a new estimate released last March; ironically, the oilsands expansions that make the pipeline project seem all the more urgent are also causing labour costs to shoot through the roof.
Now it looks like the project is to be delayed another decade or more, according to the Calgary Herald, since nobody in a consortium that includes Imperial Oil and Shell is willing to cough up the money to build it. They hope the Canadian government will kick in:
[TransCanada Corp. chief executive Hal] Kvisle said there is “no bigger picture solution” to the problems plaguing the Mackenzie Valley line, which include a time-consuming regulatory process in addition to higher costs.
He estimated the pipeline proponents have spent a combined $600 million to steer the project through the regulatory process to date.
Painted against a backdrop of rising costs and regulatory delays is an uncertain outlook for natural gas prices.
Earlier this week Calgary-based Tristone Capital said the current proposal is uneconomical without substantial government aid.
Further, Tristone analyst Chris Theal said failure of Canadian companies and agencies to agree on fiscal terms could delay the project up to 15 years.
Woe is them. This seems like a superb opportunity for the Canadian government to not support an economically marginal project with potentially enormous environmental and social costs.
Photo: The Mackenzie River, Flickr/EclecticBlogs