August 27, 2008 / 9:33 PM / 9 years ago

Canada's Harper still optimistic on Mackenzie gas

TUKTOYAKTUK, Northwest Territories (Reuters) - Canadian Prime Minister Stephen Harper said on Wednesday he remains optimistic the C$16.2 billion ($15.4 billion) Mackenzie gas project in the Arctic will eventually proceed, despite years of delays.

The proposed Mackenzie Valley pipeline, which would carry gas to markets in Canada and the United States from three large fields in the Mackenzie River Delta, has been mired in a lengthy regulatory process while costs have surged.

“I‘m optimistic in the not-too-distant future that this project will some to fruition,” Harper said in Tuktoyaktuk, a small Arctic village near where the Mackenzie River flows into the Beaufort Sea.

Harper said the project meant more to Canada than just a “commercial gas project.”

“It is ultimately about opening up a region of the country in a way that it has not been opened up before and of establishing our economic reach and sovereignty in a way it has never been done before,” he told reporters.

Besides the regulatory process, the pipeline’s backers, led by Imperial Oil Ltd, have been in talks with Ottawa over their request for fiscal breaks that would make the project economically viable.

Harper visited Tuktoyaktuk in a campaign-style stop aimed at bolstering the country’s sovereignty in the resource-rich Arctic, where some of its territorial claims -- notably the fabled Northwest Passage from the Atlantic to the Pacific -- are disputed by other countries.

The Mackenzie pipeline would ship up to 1.9 billion cubic feet of gas a day 1,200 km (750 miles) along the Mackenzie River valley in the Northwest Territories to the Alberta border.

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

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

($1=$1.05 Canadian)

Additional reporting by Jeffrey Jones in Calgary; Editing by Rob Wilson

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