Ottawa offers to pay some costs of Mackenzie pipeline: Prentice

The Canadian government has made a financial offer to the backers of the long-proposed Mackenzie Valley natural gas pipeline in the Northwest Territories, says the federal minister responsible for pipelines.

Environment Minister Jim Prentice said the government's offer would contribute to some infrastructure costs, as well as cover expenses related to the long regulatory process that the project is undergoing.

Prentice announced the offer Monday in Calgary, following a morning meeting with Imperial Oil and other proponents of the $16.2-billion proposed project.

"We need to see this project constructed because we, the citizens of Canada, are the owners of that gas and we, the citizens of Canada, are going to benefit from royalties and taxes that follow from it," Prentice told CBC News late Monday.

While he would not disclose how much federal money is on the table, since negotiations are underway, he said the government is offering to share the project's "risks and returns."

"I anticipate that we'll hear back very quickly … from the proponents, and we are in a position to respond when they approach us," he said.

"I am realistic about some, I think, some tough negotiations that still have to happen, but I'm hopeful."

The federal contribution will not be part of any economic stimulus package to be included in the budget being released Jan. 27, Prentice added.

A corporate consortium led by Imperial Oil Ltd. wants to build a 1,220-kilometre pipeline through the Northwest Territories to Alberta, where natural gas would then flow to markets in the rest of North America.

Companies likely to respond to offer soon

If approved, the Mackenzie Valley pipeline would be the largest private construction project in Canada.

Other companies in the consortium include ExxonMobil Canada, Shell Canada Ltd. and the Aboriginal Pipeline Group, which represents aboriginal communities along the pipeline's proposed route.

Aboriginal Pipeline Group president Bob Reid said the consortium will likely respond to Prentice's offer soon.

"I would expect these discussions to be concluded within a matter of weeks, not months," Reid said.

Pipeline operator TransCanada Corp. also has a stake in the project, which has been stalled for years while it goes through the regulatory process.

The project proposal is being reviewed by the Joint Review Panel, which is examining the impacts the pipeline could have on the environment and people along its proposed route.

A spokesman for the Joint Review Panel said it is considering whether it can speed up the timeline for releasing a decision, after some of the agencies that created the panel called for that decision to come out in March and not December as planned.