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Muted response to pipeline go-ahead
Concerns over economic viability of Mackenzie Gas Project

Roxanna Thompson
Northern News Services
Published Thursday, December 23, 2010

LIIDLII KUE/FORT SIMPSON - The National Energy Board's decision is being viewed as a positive development in Fort Simpson but not as a decisive sign that the Mackenzie Gas Project will be built.

On Dec. 16 the National Energy Board granted its regulatory approval of the $16.2 billion pipeline - six years after the proponents, led by Imperial Oil, submitted its major application for the project.

"I'm very happy we're still progressing forward," said Kirby Groat, a local businessman and the former president of the Fort Simpson Chamber of Commerce.

While Groat is pleased the board completed its review of the pipeline project he's not making plans to prepare for the pipeline just yet.

"It's still a long ways to go before anything will happen," he said.

The response to the board's decision has been muted in the village, said Mayor Sean Whelly.

"We've lived in a state of uncertainty for a long time and that hasn't really changed," he said.

"No one's holding their breath waiting for a pipeline."

Whelly described his own response as a mix of cautious optimism and muted skepticism about whether the project can move ahead in this economy. Whelly said he's worried the economics of the project have changed and lost ground since the review process began.

The decision on the economic viability of the pipeline will be the more interesting announcement, Whelly said. He hopes Imperial Oil can reach an agreement with the federal government on financial support and that First Nations in the Deh Cho will be able to participate in the pipeline and see economic benefits.

The board's approval of the project is dependent on more than 200 conditions being met by the proponents, which include Exxon Mobil Corp, ConocoPhillips and Royal Dutch Shell PLC.

One of the requirements is that construction of the 1,200-kilometre pipeline begins by the end of 2015.

Pius Rolheiser, spokesperson for Imperial Oil, said meeting that deadline could prove difficult if a positive fiscal agreement with the Canada is not in place.

"We would need to have sufficient confidence in a fiscal agreement with the federal government before we could make a decision to restaff the project and resume engineering work, permitting work, Rolheiser said.

That work will take three years to complete, with several thousands of permits needed before construction can begin.

Imperial Oil had previously requested to have until 2016 to decide whether to proceed with building the pipeline.

The board's decision calls for the proponents "to file an updated cost estimate and report on their decision to build the pipeline" by the end of 2013.

Whether that clause means the proponents must update the board on the progress the project is making- or whether it means Imperial Oil and others must decide to construct the pipeline in 2013- still remains unclear.

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