Imperial, Ottawa in talks over Arctic pipeline

Fri Nov 25, 2011 6:27pm EST
 
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By Jeffrey Jones

CALGARY, Alberta (Reuters) - Imperial Oil Ltd and Ottawa have resumed talks over a financial support package for the Mackenzie gas pipeline in the Far North, but the company would not say on Friday if it was any closer to proceeding with the C$16.2 billion (US$15.4 billion) project.

Discussions aimed at making the long-delayed development economically viable restarted some time in the second-half of this year after the two sides took a "hiatus" before the last federal election in May, Imperial spokesman Pius Rolheiser said. He declined to offer details.

"I'm not going to go any further in terms of what may or may not be under discussion except to say that we continue to be in discussion," Rolheiser said.

The pipeline, which would carry up to 1.2 billion cubic feet of natural gas to southern markets from the Mackenzie Delta on the Beaufort Sea coast, is several years behind schedule.

It won regulatory approval nearly a year ago, but is pressured by high construction costs and questionable returns due to weak gas markets as the industry develops cheap shale reserves across the continent.

Imperial and its partners have sought a multibillion-dollar support package to improve the economics. It would include public funding for roads, airstrips and other infrastructure in the sparsely populated and largely undeveloped Northwest Territories.

The territory's premier and one of the project's biggest champions, Bob McLeod, told Reuters on Friday that he understood there were positive moves on that front. Communities across the region have been hoping for years that the project would proceed so they could win economic benefits.

"The updates that we've been getting are that there is activity in the area," he said. "I don't know the details, but from what I hear it's very promising."   Continued...