The Joint Review Panel (JRP), an independent body appointed in 2004 to evaluate the environmental and social impacts of the MacKenzie Gas Project (the Project) has issued its report conditionally approving the Project, subject to the implementation of a large number of recommendations.

The Project

The Project is proposed by a partnership between Imperial Oil, Royal Dutch Shell, ConocoPhillips, ExxonMobil Corp and Aboriginal Pipeline Group (the APG) to transport natural gas from the MacKenzie Delta (near the Beaufort Sea) into Alberta. The APG was formed in 2000 to represent the ownership interest in the Project of the Aboriginal peoples of the Northwest Territories. The proposed pipeline will extend 1220 km from Inuvik into Alberta and is designed to transport as much as 1.2 billion cubic feet per day of gas, including reserves held or currently being explored for by third parties.

Approval is being sought for the proposed pipeline, the development of three natural gas fields in the Delta including a system of gathering pipelines and a processing facility, and new facilities in northwest Alberta including a connection to the NOVA Gas Transmission Ltd. system. The cost of the Project is estimated at some $16.2 billion.

The JRP’s Recommendations

The JRP includes representatives of three bodies: the Mackenzie Valley Environmental Impact Review Board, the Inuvialuit (represented by the Inuvialuit Game Council) and the federal Minister of Environment. It released its Report on December 30, 2009 following 21 months of hearings in 26 northern communities. The JRP approved the Project subject to fulfillment of 176 recommendations with respect to: “cumulative impacts monitoring and management”, “sustainability”, “natural environment”, “economy”, “social and cultural environment”, and “public confidence in government preparedness”.

The discussion on sustainability touched on five key issues: 1) cumulative impacts on the biophysical environment; 2) cumulative impacts on the human environment; 3) equity impacts; 4) legacy and bridging; and 5) cumulative impacts management and preparedness. The impacts on the natural environment addressed by the JRP included: project design, construction and operations; migratory bird habitat; species at risk; woodland caribou; marine and aquatic environments; greenhouse gases; and conservation measures. With respect to economic impacts, the JRP addressed: procurement and business; employment and income; revenues to governments; and project legacy.

The Report throughout emphasizes the importance of measuring impacts cumulatively and continuously, and the importance of using the Project as means of improving the livelihoods of local people and promoting a sustainable future for the MacKenzie Valley and the Beaufort Delta. The JRP stressed that its approval was conditional on the full implementation of all 176 recommendations put forward in its Report.

Next Steps

The next step in the process is for the federal government and the Project proponents to respond to the JRP’s report. The National Energy Board (the NEB), which has been holding separate hearings since January 2006, began hearing final arguments on April 12, 2010. It is expected to issue a final decision in September of this year. If the NEB determines that the Project is in the public interest, it will recommend to the Governor General-in-Council that a Certificate of Public Convenience and Necessity be issued, allowing the Project to go forward subject to the NEB’s own terms and conditions.

Given the Project’s price tag, the terms and conditions put in place by the government and regulators, and the apparently fragile economics of the Project (particularly in view of continuing low natural gas prices), it remains to be seen whether, and when, the Project proponents will wish to see the Project through.