Mackenzie Gas Pipeline Faces New Delay on Deferred Review

OTTAWA (Dow Jones Newswires), May 16, 2008

The proposed start date for the C$16.2 billion Mackenzie gas pipeline could be delayed yet again, after a key regulatory review for the troubled project was pushed into next year.

A joint federal and provincial panel assessing the pipeline's environmental and social impact is now expected to publish its report next year, project leader Imperial Oil Ltd. (IMO) said. The panel's report, which had been expected in October, is needed before Canada's National Energy Board can make its regulatory ruling.

"We understand at this point that we're looking at a delay into 2009," Imperial spokesman Pius Rolheiser said Friday, adding that the panel hasn't informed the company directly. "While we recognize that the Joint Review Panel has a significant task, we don't understand the reasons for this delay."

Officials at the JRP or related regulatory bodies couldn't be reached for comment.

This is the latest in a series of setbacks for the massive pipeline, which would connect natural gas from Mackenzie Delta on the Beaufort Sea coast to Canadian and U.S. markets, transporting up to 1.9 billion cubic feet a day. The project's proponents are still trying to hammer out fiscal and commercial terms with the federal government, and negotiate right of way agreements with a number of First Nations groups whose lands fall under the proposed pipeline route.

The pipeline's start date has already been pushed back several times, most recently to 2014, and the deferred report could delay this to the following year.

"We said the start up would be no earlier than 2014," Rolhesier said. "It's difficult to say with any certainty what impact this will have but ... it's not positive."

He added that the pipeline's proponents are advancing on non-regulatory aspects, and had made "significant progress" with several First Nations groups since the start of the year. They are also continuing their dialogue with the federal government on proposed fiscal terms, he said, but declined to offer further detail.

Imperial's partners are Royal Dutch Shell PLC (RDSA), ConocoPhillips (COP), ExxonMobil Corp. (XOM) and the Aboriginal Pipeline Group.

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