October 30, 2009 / 6:47 PM / in 8 years

Backers still pursuing Canadian Arctic pipeline

CALGARY, Alberta (Reuters) - Companies backing a C$16.2 billion ($15 billion) Canadian Arctic gas pipeline continue to pursue the long-delayed project despite a report that a federal cabinet committee has balked at providing a financial support package, company executives said on Friday.

The senior officials at Imperial Oil Ltd, the project’s lead partner, and Exxon Mobil Corp offered no details on the status of talks with Ottawa, however, or on exactly what the committee may have rejected.

“We’re continuing to work with the federal government of Canada to set up an appropriate fiscal regime to ensure this project is economically viable and can be developed, and those discussions are continuing,” Paul Smith, senior vice-president of finance at Imperial, said in an interview with Business News Network.

The comments follow a report in the National Post newspaper earlier this week quoting unnamed sources as saying that the committee may have scuttled the project by rejecting an assistance package proposed by Environment Minister Jim Prentice, who is responsible for overseeing the development.

Prentice has shed no light on the situation in recent days, telling reporters only that Mackenzie is a private-sector venture that must proceed “on an economic basis under market principles.”

The planned 1,220 km (760 mile) pipeline through the Northwest Territories would tap gas fields under the Mackenzie River Delta in the Arctic, delivering as much as much as 1.9 billion cubic feet of gas a day to southern markets.

Andrew Swiger, senior vice-president at Exxon Mobil, told a Calgary audience on Friday that the world’s largest publicly traded oil company still believes Mackenzie gas will be needed to meet expected increases in North American demand.

“We, along with the other proponents of the project continue to work diligently with communities, the regulators, and governments to progress this sensitive project and we all hope we will see some outcome of that in the not-too-distant future,” Swiger said.

Backers, which also include Royal Dutch Shell, ConocoPhillips and Aboriginal Pipeline Group, have not yet decided to proceed and are still awaiting regulatory clearance.

The Joint Review Panel, the regulator weighing the environmental and socioeconomic impact, is due to release its report in December, several months past its original timetable. The National Energy Board, responsible for economic and technical aspects, has said it will hear final arguments in April.

Low gas prices and burgeoning supplies from shale gas developments in the United States and Canada may also affect the viability of the project, analysts have said.

But Smith said Imperial remained “very positive” about Mackenzie.

“I’ve read some of the press ... Our company takes a longer view and a more analytical view than what you’re reading there,” he said.

($1=$1.08 Canadian)

Reporting by Jeffrey Jones; editing by Peter Galloway

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