N.W.T. minister hopes Mackenzie Gas Project permit doesn't lapse

The minister in charge of resource development in the Northwest Territories says he hopes the federal permit to build the long-dormant Mackenzie Gas Project will be extended.

"We don't want to see all the work that's gone into it just disappear and have to be started all over again at some other point in time," David Ramsay said in an interview from Houston, where he got an update from energy heavyweight ExxonMobil Corp.

ExxonMobil is the majority owner of Imperial Oil Ltd. (TSX:IMO), the Calgary-based company leading the Mackenzie project. 

When the project got its Certificate of Public Convenience and Necessity in 2011, backers were given until the end of 2015 to start construction.

But the proposed pipeline, which would run 1,200 kilometres from gas fields near the coast of the Beaufort Sea to the Alberta boundary, has been put on hold indefinitely. 

The natural gas market has been transformed since proponents first filed for regulatory approval more than a decade ago, with shale formations in Canada and the United States providing a closer, cheaper and more abundant source of natural gas.

Imperial proposed extension

In April, Imperial sent a letter to the National Energy Board requesting a meeting "to seek guidance on the process required for the board to consider an extension to the date for commencement of construction."

"While industry circumstances and markets have changed in the intervening years, the project proponents believe the Mackenzie Gas Project remains in the best interests of the North and Canada and will be proposing an extension to this date."

Imperial spokesman Pius Rolheiser confirmed the company has been in talks with the federal energy watchdog "regarding the project's regulatory approval," but that details of those discussions are confidential.

"We're continuing to evaluate options for the project, looking at how changes in the North American natural gas market could potentially influence a path forward for the project," said Rolheiser.

Still hope

Many in the Northwest Territories had been looking forward to the economic boost that would come from developing its natural gas resources.

Ramsay hasn't given up hope. 

"It's important that we get some surety on where that's at," he said.

"It's an extension that would give us some surety that not all that work's going to be lost."

The best hope for Mackenzie gas would be to feed it into a liquefied natural gas export terminal on the British Columbia coast, said Ramsay.

Exxon and Imperial are contemplating building an LNG plant with a price tag as high as $25 billion near Prince Rupert, B.C., but has a lot of work to do before it can decide officially to proceed. 

Ramsay said he's not sure how long an extension would be needed, but "five years would be a good place to start."