November 16, 2010 / 2:53 PM / in 7 years

Final decision on Canadian Arctic pipeline near

CALGARY, Alberta (Reuters) - A final decision on building the long-delayed Mackenzie Gas Project is expected next month after Canada endorsed most of the recommendations of a report on its likely environmental and social impact.

Ottawa and the government of the Northwest Territories on Monday issued a formal reply to the 176 recommendations of a panel that studied the proposed C$16.2 billion pipeline to take gas from Canada’s Arctic to southern markets.

Led by Imperial Oil Ltd, the pipeline would move about 1.2 billion cubic feet a day to Alberta from gas fields in the Mackenzie Delta on the Beaufort Sea coast.

With the government’s response in hand, Canada’s National Energy Board can now issue its final ruling on the project, nearly wrapping up an epic regulatory review process that has gone on for more than six years.

“It will take about one month from today to wrap up the final decision,” said Sarah Kiley, a spokeswoman for the NEB.

Most observers expect the board to approve the project with conditions.

Despite pleas from the panel that its report should be completely adopted, the governments rejected 27 of its recommendations, mostly because they were considered outside of its mandate.

“Recommendations determined to be out of scope were considered beyond the subject matter or geographic scope of the Mackenzie Gas Project applications that the Joint Review Panel was asked to consider,” the two said in their response to the panel report, issued late last year.

“As a matter of principle, the governments have taken the position that they will not accept such recommendations.”

The two governments had earlier this year said they couldn’t support all of the review panel’s advice. But they said implementing the recommendations they have backed should limit or eliminate any adverse social and environmental effects from the project.

Besides regulatory delays, the proposal has been hit by rising costs, falling natural gas prices and the prospect of competition from a much larger Alaska gas pipeline.

Earlier this year, Imperial and its partners pushed their sanctioning decision to late 2013.

The other pipeline proponents are Royal Dutch Shell Plc, ConocoPhillips, Exxon Mobil Corp and the Aboriginal Pipeline Group.

Reporting by Scott Haggett; Editing by Frank McGurty

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