Under pressure: Imperial stands by Mackenzie gas pipe project.
Imperial sticks by Mackenzie pipe
US supermajor ExxonMobil’s backing of an Alaska pipeline does not change plans for proponents of the C$16.2 billion (US$14.5 billion) Mackenzie gas line as they struggle to move past delays and rising costs, the lead partner of the Canadian project said.
However, if the massive Alaska pipeline gains enough momentum with ExxonMobil's participation to put construction on similar schedules, the already-fragile economics of Mackenzie would suffer, Imperial Oil said.
"The announcement yesterday doesn't change our approach to advancing the project at all," Imperial spokesman Pius Rolheiser told Reuters.
"The proponent group remains committed to our project and we're focused on doing the work that we can, and that includes completing the regulatory process, completing the fiscal discussion with the government and completing access and benefits agreements with the First Nations along the pipeline route."
ExxonMobil said yesterday it agreed to support TransCanada plans for a US$26 billion pipeline to Alberta from Alaska, which would allow it to tap its gas reserves in Alaska's North Slope.
The effort has the blessing and some financial backing from the state of Alaska, and loan guarantees from Washington may soon be raised to $30 billion from $18 billion.
ExxonMobil also has an interest in Mackenzie, which would carry up to 1.9 billion cubic feet of gas a day to Alberta from the Mackenzie Delta on the Beaufort Sea.
Besides its stake in the project, the U.S. oil major owns 69.6% of Imperial.
Ottawa has said North America will ultimately require gas from both projects, but it wants Mackenzie developed first.
"Should the two projects proceed in the same time frame, it would obviously put greater economic strain on the (Mackenzie) project," Rolheiser said.
TransCanada, which is also involved in both, has said it aims to have the Alaska project in service by 2018.
Imperial had set a 2014 in-service date for Mackenzie in 2007.
Since then, the regulatory process has dragged for the Mackenzie pipeline, whose backers also include supermajors Shell and ConocoPhillips and the Aboriginal Pipeline Group.
Late last year, the panel weighing the line's social and environmental impacts said it aimed to deliver its report by December 2009, months past the previous deadline.
Meanwhile, Imperial and its partners are negotiating with the Canadian government over a fiscal package, which Environment Minister Jim Prentice offered in January.
With it, Ottawa would foot the bill for roads, airstrips and other infrastructure, among other aspects of the project.
There has been no agreement on that package, and Rolheiser declined to say what the stumbling blocks are, or if the Alaska project's new momentum would mean Ottawa may have to increase its contribution.
For its part, ExxonMobil has said its support for the Alaska project does not preclude its involvement in Mackenzie.
"From my understanding there's no change in our efforts to progress Mackenzie," Marty Massey, ExxonMobil's US joint interest manager, said in a conference call with reporters.