Monday, November 15, 2010

Major pipeline in northern Canada years away, despite approval

The proposed pipeline would run through the Mackenzie Valley.

The proposed pipeline would run through the Mackenzie Valley.

Photograph by: HO/AFP/Getty Images, HO/AFP/Getty Images

OTTAWA — A proposed $16 billion pipeline project in northern Canada could still be years away from beginning construction, despite getting a green light from the federal and Northwest Territories governments Monday, says a spokesman from the leading stakeholder, Imperial Oil.
"The project would literally need thousands of individual permits for specific pieces of work," said Imperial Oil spokesman Pius Rolheiser. "As we said in our (public submissions), the stars would really need to align in order for construction of the project to commence in 2014."
The two governments delivered a 127-page report on Monday that is rejecting many of the recommendations proposed by an environmental review panel, and referring others to the National Energy Board which is expected to release its own conditions for the project in the coming weeks.

Rolheiser said the project proponents are also hoping to continue negotiations on financial aspects of the program such as taxes and royalties.

Environment Minister John Baird acknowledged that talks had taken place, without making any commitments.

"I think at the end of the day this is going to have to be a commercial decision," Baird told reporters. "The price of natural gas is very different than just a few short years ago or certainly very different from when this project was initiated."

But he added that there could be tremendous economic benefits for Canada and its northern region in particular. Rolheiser added that Imperial Oil remains committed to the project which could provide energy for oilsands operations as well as for residential customers.

In the report released on Monday, the governments said a number of the environmental protection recommendations were outside the scope of the panel's mandate.

For example, a recommendation for the government to introduce legislation or regulations to reduce greenhouse gas emissions and meet its current climate change targets was rejected outright.

"The government of Canada understands that the panel heard concerns from many members of the public on this issue and understands that it may have linkage to the sustainability framework utilized in the review process," said the government in its final report. "However the government of Canada is of the view that it is not an issue that can be dealt with in a project-specific environmental assessment."

The governments also rejected recommendations setting specific requirements for annual progress reports analyzing and assessing environmental protection measures for the project, starting with one within a year.

"The governments of Canada and the Northwest Territories note that this recommendation is outside the scope of the joint review panel's mandate, and therefore the governments do not accept this recommendation," said the report.

But environment ministers from both governments said that the Mackenzie gas project would be environmentally sustainable if the private partners, led by Imperial Oil, decide to proceed with construction of the pipeline. Baird said he believed that the governments were accepting the majority of the recommendations.

Stephen Hazell, an Ottawa-based environmental lawyer, said he doesn't expect the project will go ahead because of all the delays and economic challenges, but he was disappointed by the government's overall response on environmental protection measures and concerns raised by the panel.
"The panel is coming to grips with the idea that how the gas is used at the end of the day or at the end of the pipeline is an important aspect of whether or not the project is sustainable," said Hazell. "If the gas is being used to fuel the tarsands industry, it's hard to see that as being sustainable. If on the other it's being used to displace coal-fired electrical generating in Alberta, that's a pretty good thing."

But Hazell said he was pleased that the government had accepted recommendations on developing a strategy for protected areas.

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