courtesy Atlas Pipeline Partners

Comment:

The success and promise of alternate gas sources — growing shale, oil-sands synthetic gas, liquefied natural gas and a rival pipeline — have key partners in a Canadian arctic-gas pipeline mega project worried it won't come to be.

In an article in Canada's Globe & Mail, native leaders hoping to be $8-billion partners in the Mackenzie Valley project via their Aboriginal Pipeline Group have expressed a high level of angst that the $16-billion effort will stall and not bring development to their poverty-hit northern First Nations communities.

“It all comes down to the almighty dollar, and when the producers see that they can make a good return, then things will happen,” the newspaper reported chairman of the aboriginal pipeline Fred Carmichael saying.

The Mackenzie Valley project has been slowed by regulators negotiating a finance deal between the Government of Canada and partners TransCanada Inc., Imperial Oil, ConocoPhillips, Royal Dutch Shell and Imperial Oil parent company Exxon Mobil Corp.

All parties are weary of depressed gas prices in Western Canada, and the government knows its war chest holds the key to project advancement.

The consensus is that arctic gas and alternate sources like Syngas will become more valuable when conventional gas supplies thin, a phenomenon still without a timeline. North American gas demand will get stronger, especially in Canada, where 250,000 new Canadians every year continue to buy gas-heated homes.

Mackenzie Valley’s main problem is that Exxon in June 2009 decided to become a key partner in a rival pipeline to bring Alaskan North Slope gas to U.S. customers via Canada and TransCanada . The 2,700-kilometre, $26-billion Alaska pipeline will carry four-times the proposed volumes of the would-be Mackenzie project — 4 billion cubic feet per day versus 1 Bcfd.

Though Mackenzie is stalled pending a fresh look at markets and pipeline economics by the Canadian Feds and their oil company partners, Alaska is set to move throughput by 2018.

Meanwhile, aboriginals might be excused for worrying that just one oil company — in this case Exxon — is key to the financing of both the Alaska and Mackenzie projects: combined cost $40-plus-billion.

Tags: ConocoPhillips, ExxonMobil, TransCanada Corporation