In a historic decision, the National Energy Board (NEB) has approved the Mackenzie Gas Project, stating that it believes the $16.2 billion project to be in the public good.
“We find that the North and Canada would be better off with the project,” the NEB wrote in its report. “These economic, environmental and social objectives must be brought together to create the North that many people want. It takes a good economy to take care of the land and the people. We are convinced the Mackenzie Gas Project would bring the Northwest Territories closer to the vision of the North that many people shared with us.”
The NEB’s decision, which was released at 2:30 p.m. mountain time on Dec. 15, comes six years after the regulatory process began.
Northwest Territories Industry, Tourism and Investment Minister Bob McLeod called the NEB’s decision “an early Christmas present” for the Northwest Territories.
“This is an important milestone for a project that could provide significant economic and environmental benefits for the Northwest Territories,” he told reporters at a Yellowknife news conference.
But an official with one of the pipeline’s main proponents said the regulatory body’s approval of the project was simply the first of many decisions that need to be made before the 1,200 km pipeline from the Beaufort Delta to northern Alberta is constructed.
“Approval from the NEB is a significant, very positive step for the project, but it’s only one in a number of steps that yet remain in front of us before this project can become a reality,” Imperial Oil’s Pius Rolheiser said.
Rolheiser said the proponents will need to take some time to examine the decision, as well as the 264 conditions laid out by the NEB, before making a decision on whether to construct the pipeline. The NEB’s decision also needs to be approved by the federal cabinet, which should happen in the first quarter of the new year, Rolheiser said.
Bob Reid, the president of the Aboriginal Pipeline Group – which owns a one-third stake in the project – said the NEB’s approval was an important first step.
“It’s a great day for Canada, and a great day for the North in particular,” he said. “This has been a long time coming … the North, and the Mackenzie Valley in particular, is in a bit of an economic slump at the moment – lots of unemployment, and contractors without work. This gives the Mackenzie Valley a new future.”
Kevin O’Reilly, a member of the Yellowknife social justice group Alternatives North, stated they were disappointed with the NEB’s decision, saying the report did little to deal with the issue of sustainability, and failed to go into much detail on how the NEB reached its conclusions. It simply explained the positions of a few “key” organizations that appeared in hearings before the NEB.
“Then they all of a sudden jump to a conclusion or a finding without really providing much in the way of reasons,” O’Reilly said. “I find that really quite surprising because the title of this is actually ‘Reasons for Decision’ and I would have expected there’d be some rationale for the conclusions that they reached.”
The NEB’s decision not to grant the proponents a three-year extension to decide whether to build the pipeline could make the process “challenging,” Rolheiser said. The NEB has given the proponents a deadline of Dec. 31, 2013 to decided whether to go ahead with the project. The proponents had argued they needed until 2016 to decide whether the pipeline made economic sense and to secure a fiscal arrangement with the federal government.
“We said back in our final arguments … that the stars would really need to align in order for us to be able to make an investment decision in 2013,” Rolheiser explained.
But McLeod said the GNWT was pleased with the short sunset clause, as well as the possibility of communities creating natural gas distribution systems to replace systems that currently use heating oil and diesel generation.
“I was born and raised in the Northwest Territories and there was talk about the pipeline 40 years ago,” he said. “I think it’s taking too long. But I think this is the closest we’ve been to a pipeline, so we’re very optimistic and pleased with the NEB and its reasons for decision.”
The NEB have set the project’s sunset clause, the date by which the proponents must begin construction or lose the permit, as Dec. 31, 2015.
“For construction to commence by 2015, the project would need to quickly reach agreement with the government on the fiscal terms for the project,” Rolheiser said, noting that the proponents would also have to reassemble a project team to resume the required engineering, fieldwork and permitting. “All of which needs to be done in order for us to do, and ultimately receive, the thousands of additional permits that the project would require. We would need to have those thousands of permits in hand before we can make a decision to construct.”
Western Arctic MP Dennis Bevington said he was surprised the NEB did not extend the sunset clause.
“With the price of natural gas being what it is, I thought the NEB would be a little more forgiving with the company,” he said.
If the project requires federal support, Bevington said he would rather see that support in the form of infrastructure development, in order to bring the costs down.
O’Reilly said the sunset clause was “hollow” and would allow the NEB to extend the deadline if the proponents provided valid excuses.
“I think it’s just spinning this out again,” he said. “I think they’ve caved in quite a bit to what the proponents had wanted.”
Hay River South MLA Jane Groenewegen said she was “very pleased” with the news.
This could be very good news for Hay River,” she told The Hub. “Much will still depend on the price of gas and the confidence of the producers and pipeline proponents to proceed.”
If the project were to go ahead, the approximately 442,000 tonnes of steel pipe, as well as the fuel required to build the pipeline would be shipped to Hay River via rail. It would then be barged to locations north of Fort Simpson. Any material destined for locations south of Fort Simpson would be offloaded onto trucks.
NTCL president Bill Duffy said the pipeline’s construction would be a boon for both Hay River and the company.
“There’s no question it’s going to mean a tremendous amount to NTCL,” Duffy said. “It’s exciting to see the permit has been issued by the NEB, but there are still some very big decisions that the major players need to decide on.”
While Duffy was unable to give an exact number of jobs that would be created locally, he said it would match the company’s historical high for local employment.
“It would be a major, major increase in personnel, without a doubt, including the terminal and the shipyard,” he said.
Talks between the proponents, who include Exxon Mobil Corp, Royal Dutch Shell PLC, and ConocoPhillips in addition to Imperial Oil and the APG, and the federal government on a fiscal agreement have been “on hiatus” since earlier this year, Rolheiser explained. He said it’s too early to say when they would resume.
“Given the timing concerns, we would obviously seek to reengage that dialogue with the federal government in as timely a manner as we can.”
The MGP will contribute $67.5 billion to the NWT economy and create over 5,000 jobs over the course of its construction, according to estimates.