Northwest Territories Premier Bob McLeod says the key to reviving dormant plans for the Mackenzie Valley pipeline will be to transport natural gas from the Arctic into British Columbia instead of Alberta.
Private-sector proponents of the Mackenzie line consider the NWT project to be currently uneconomic, based on market conditions of plentiful gas supplies in North America.
But the prospect of liquefied natural gas exports from British Columbia to Asia has given a new lease on life to the much-delayed Arctic venture, Mr. McLeod said.
"We've never given up on the Mackenzie Valley pipeline," he said in an interview during a visit to Vancouver, just days after leading a NWT trade mission to China.
"After coming back from China, I'm convinced that the Chinese are going to need Canadian natural gas."
In 1974, Justice Thomas Berger, a Supreme Court of British Columbia justice at the time, headed a commission into plans for the Mackenzie route. He concluded his lengthy inquiry in 1977, recommending a 10-year moratorium on construction because of unsettled First Nations land claims. A series of political and economic delays then dogged the venture.
Instead of building a line from Inuvik to TransCanada's system in northern Alberta, it makes more sense now to examine construction to northern British Columbia, Mr. McLeod said.
The Imperial Oil Ltd.-led Mackenzie Delta Producers Group and pipeline builder TransCanada Corp. signed a 2003 deal that was hailed as a breakthrough at the time because they agreed to give Inuvik-based Aboriginal Pipeline Group one-third ownership in the energy project. Low natural gas prices in recent years amid a supply glut, however, relegated the Mackenzie project to a low priority.
In December, Imperial and partner Exxon Mobil Canada Ltd. received approval for a 25-year B.C. LNG export licence from the National Energy Board, but their West Coast Canada LNG joint venture is still searching for an export terminal site in British Columbia.
Imperial spokesman Pius Rolheiser said WCC LNG is pondering its next move. "We are thinking about whether or not there might a role for Mackenzie gas as a potential supply source," he said.
"We remain hopeful that we can assist in the development of that resource."
David Ramsay, the NWT's Minister of Industry, Tourism and Investment, said he bumped into Mr. Berger in Vancouver recently, and the chance encounter served as reminder of the opportunities and challenges in trying to build a pipeline from huge gas fields in the NWT to the originally targeted destination of Alberta.
Alberta has long been seen as the logical connecting point because NWT gas could then be sent to the oil sands and also to other lines that lead into the United States.
But with the U.S. requiring less Canadian natural gas in recent years due to the shale gas boom south of the border, Asia has emerged as a strong prospective buyer of B.C. LNG, Mr. Ramsay said.
Imperial said in December that its cost estimate for the Mackenzie project is more than $20-billion, or at least 40 per cent higher than the previous price tag in 2007.