This coalition of Northwest Territories native communities owns one-third of the proposed Mackenzie Valley Pipeline, which is about half of the $16-billion Mackenzie Gas Project that also includes new Arctic production installations.

Alberta Oil: What is the state of the northern pipeline project?
Bob Reid: This is the year natural gas from the Mackenzie Delta was originally scheduled to flow when the regulatory applications were filed in 2004. Don’t hold your breath.

AO: Why the holdup?
BR: There are a number of reasons. One stands out – the Joint Review Panel [representing federal, aboriginal and territorial agencies concerned with socio-economic and environmental issues]. The seven-member JRP’s performance has been dismal and very disappointing to our pipeline group’s aboriginal shareholders. By last December the National Energy Board had adjourned its hearings [on technical, economic and safety matters] for three years, waiting for the JRP’s report. At the JRP they are staying silent about what’s taking so long. It’s taking them two years just to write their report. Usually this would take two to four months.

AO: Does the dawdling jeopardize the Mackenzie project?
BR: We’re not in competition with the Alaska pipeline project. But it might precede us. Then it becomes far cheaper to expand an existing pipeline than to build a new one. You could expand a completed Alaska line to carry one to 1.2 billion cubic feet of gas per day [the Mackenzie route’s planned initial capacity] for 60 per cent of the cost to build the Mackenzie pipeline. If the Alaska project goes first, the Mackenzie pipeline will be put on the shelf for a very long time.

AO: Are there other risks?
BR: The Aboriginal Pipeline Group is a business deal. It’s been negotiated by aboriginal people for aboriginal people. APG will have to borrow 100 per cent of its $2.6-billion share in construction costs. This is no problem. The project has an investment-grade credit rating if it goes ahead. But the period prior to receiving regulatory approval, before the pipeline can be loan security, is risky. TransCanada gave APG a loan to fulfil monthly cash calls during this period. The total has reached $140 million. TransCanada writes it off if the pipeline is not approved. APG doesn’t have to pay a cent. That’s a loan you could not negotiate in the commercial market. The JRP has totally dropped the ball. This delay might be taken as a symbol that the North is not ready for this project.

AO: Is gas industry evolution overtaking the Mackenzie pipeline?
BR: I still believe this project will happen. It has to be economic to move forward. Governments can facilitate it. My largest concern is that the emerging shale gas resources of northeastern British Columbia are as large as the deposits on the North Slope of Alaska – and a lot closer to pipelines and markets. It’s conceivable we missed the window of opportunity.