By CLIFFORD KRAUSS, New York Times, December 31, 2009
HOUSTON — A long-delayed natural gas pipeline in Western Canada, which has the potential to provide significant amounts of energy to North America, has cleared a crucial hurdle by receiving the endorsement of a Canadian government review panel.
The $15.4 billion Mackenzie Valley project, which involves Royal Dutch Shell, Exxon Mobil and ConocoPhillips, would connect natural gas fields in the Arctic with the rest of Canada and potentially with the United States.
Some Indian communities and environmental groups have called the 750-mile pipeline a threat to local species and native cultures and have expressed concern about the greenhouse emissions created if the gas is used to heat and upgrade oil sands into usable fuels. Greenhouse emissions from oil sands are substantially higher than from conventional oil and gas production.
But the joint review panel, after five years of study, concluded late Wednesday that the project “would deliver valuable and lasting overall benefits and avoid significant adverse environmental impacts.” It continued, “The project itself, as long-term infrastructure, provides a key basis for future economic development.”
The National Energy Board and federal cabinet still need to approve the project, but they are expected to follow the recommendations of the review panel. The board is scheduled to hold hearings in April.
If the project is approved, the oil companies would then have to decide whether to build the pipeline, given the current low gas prices, the prospects for competing gas fields in western Canada and the uncertainty of financial support from the Canadian government. Furthermore, a competing and also delayed gas pipeline project in Alaska might overtake the Canadian project.
“If the oil companies think prices are firming on gas, they will go ahead with this,” said Donald Hertzmark, a consultant who advises energy companies on international projects. “It could still be important for the United States and Canada, especially if gas takes off as a transportation fuel or if environmental issues slow down or derail the development of shale gas resources.”
The oil companies originally filed applications for the project in 2004, and hoped to begin operations five years later. But the review panel took longer than expected to complete its study. Now gas industry experts say operations could start in 2014 at the earliest.
The review panel, which assessed the environmental and socioeconomic impacts, concluded that the pipeline would not harm fish in the Mackenzie River. But it called for regional planning to protect many species including polar bears, caribou and beluga whales.
It also recommended that the gas be used to replace coal-fired electrical generation to control greenhouse gas emissions that have been linked to global climate change.
The three gas fields that the pipeline would connect have reserves that are estimated at six trillion cubic feet — an amount equal to more than two years of total Canadian consumption of gas. The pipeline would initially supply about one billion cubic feet a day, which could be expanded after future offshore and onshore drilling.
The United States Energy Department has projected that Canadian annual gas consumption will increase from 3.3 trillion cubic feet in 2006 to 4.7 trillion cubic feet in 2030, largely because of the expanding needs of the oil sands industry.
Production in Canada’s conventional natural gas fields have been in decline, along with exports to the United States.
