December 31, 2009 / 1:53 PM / in 8 years

Canada pipeline report may help unlock federal funds

CALGARY, Alberta (Reuters) - A regulatory panel’s conditional support for the Mackenzie gas pipeline in Canada’s Far North could kick-start plodding talks between Ottawa and the project’s backers over an expensive fiscal support package, a top Northwest Territories minister said on Thursday.

<p>The sun sets over the Mackenzie Delta near Inuvik, Northwest Territories November 11, 2009. REUTERS/Jeffrey Jones</p>

Those discussions have dragged on for nearly a year since Canadian Environment Minister Jim Prentice made a funding offer to the pipeline’s proponents aimed at making the C$16.2 billion ($15.4 billion) project viable.

The Joint Review Panel’s report, released Wednesday after more than two years of work, said the project could bring lasting benefits to Canada’s North if pipeline backers, led by Imperial Oil Ltd, and governments follow the panel’s 176 recommendations.

“The entire focus has been on the JRP getting that piece done and everything else was secondary until that was actually before us, we knew which way they were going to go and if there was going to be clarity,” Michael Miltenberger, the territory’s environment and natural resources minister, told Reuters.

“I anticipate that work will begin anew to deal with that particular issue.”

The JRP assessed environmental and socioeconomic impacts of the 1,220 km (760 mile) pipeline, which would run along the Mackenzie River Valley in the Northwest Territories from reserves near the Beaufort Sea Coast in the Arctic to Alberta and markets beyond.

The panel’s recommendations for governments and the companies backing the pipeline are as diverse as analyzing the impact of climate change on facilities in permafrost and assessing if alcohol and drug abuse programs in the sparsely populated region are adequate.

A media report in October cast doubt on Prime Minister Stephen Harper’s cabinet backing a fiscal package, estimated to be worth billions of dollars, for the pipeline. However, top executives with the energy companies have said they were assured that talks were still on.

Prentice was not available for comment.

Imperial filed an applications in 2004 aimed at getting the line running this year. However, it has been beset with cost increases, regulatory delays and a transformation of gas markets due to the recession as well as development of massive shale gas reserves located close to major U.S. markets.

The territorial and aboriginal governments are looking to the project’s potential to create jobs and spinoff businesses.

Miltenberger said the 679-page panel report contained no big surprises, at least not on first read. The government will pore over it in detail over the coming weeks so it can prepare a response, he said.

The panel had been criticized for the time and cost to complete its assessment.

“There’s conditional support for the project with a host of recommendations. We have to focus on that,” he said. “We’ve been waiting a long time to do that and now we have to apply ourselves thoroughly over the next few months to keep this process moving at a much more timely pace.”

Canada’s National Energy Board will use the report to help make its decision on whether the pipeline can proceed. That decision is expected in September 2010.

Some environmental groups that opposed the project, or aspects of it, praised the JRP for its work.

“We didn’t get everything that we had wanted,” said Kevin O‘Reilly, director of Alternatives North, which was concerned about the impact on land and people. “The panel recommended that the full environmental management system for the Northwest Territories should be implemented as it was negotiated in land claims agreements and federal legislation. That’s something that people have been fighting for.”

In its report, the JRP said it was not persuaded that the gas would be used specifically to fuel oil sands development in Alberta. But it did recommend that Canada’s climate change policies include provisions for using gas as a transition fuel to a low-carbon economy.

($1=$1.05 Canadian)

Reporting by Jeffrey Jones; editing by Peter Galloway

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