May 16, 2008 / 2:58 PM / 10 years ago

Canadian Arctic gas pipeline faces new delay

CALGARY, Alberta (Reuters) - A key regulatory report for the C$16.2 billion ($16.2 billion) Canadian Arctic gas pipeline is being delayed by several months, likely pushing the start-up date for the stalled development back again.

The Joint Review Panel report into the environmental and social impacts into the Mackenzie Valley pipeline will not be published until next year, an official with the panel’s administrative arm said on Friday.

Project lead Imperial Oil Ltd had expected the report to be completed by October, spokesman Pius Rolheiser said.

“The JRP has not officially communicated this to us, but it’s our understanding via the Northern Gas Project Secretariat and comments they made that it’s now unlikely that we will see a report until sometime in 2009,” Rolheiser said.

It is the latest setback for a project that has been hit with many. It would be North America’s first major Arctic gas development.

“Obviously, this is going to have a negative impact on the project schedule,” Rolheiser said.

The pipeline’s backers have also been locked in lengthy talks with Ottawa over their request for fiscal breaks that would make the line economically viable.

Besides royalty and tax measures, the proponents have said they want the federal government to pay for some items, such as roads and other infrastructure.

Those discussions are still going on, Rolheiser said.

The JRP report is needed before Canada’s National Energy Board, which held public hearings at the same time, can make its ruling.

The proposed 1,200 km (750 mile) pipeline would carry as much as 1.9 billion cubic feet of gas a day to Canadian and U.S. markets from the Mackenzie Delta on the coast of the Beaufort Sea.

The most recent estimate for the pipeline’s start-up is around the middle of the next decade.

When it wrapped up hearings last November in Inuvik, Northwest Territories, the Joint Review Panel did not specify a date when it would publish its findings, said Annette Bourgeois-Bent, communications manager for the Northern Gas Project Secretariat, the administrative arm for the panel.

“What the panel has realized it recent weeks is that, just based on the amount of information, they will not complete the report this year,” she said. “They have not given any other date -- they’ve just said it will not be this year.”

Delays have already been blamed for a steep run-up in estimated costs since the project was first proposed.

Imperial’s partners are Royal Dutch Shell plc, ConocoPhillips, Exxon Mobil Corp and the Aboriginal Pipeline Group.

($1=$1.00 Canadian)

Reporting by Jeffrey Jones; editing by Rob Wilson

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