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Mackenzie gas project scrapped on rising costs, competition

A joint venture led by Imperial Oil Ltd. canceled plans to develop the Mackenzie Gas Project in the Northwest Territories, saying the project is no longer as economically competitive as it was when it was initiated more than a decade ago.

Imperial Oil cited factors such as high project costs and the expansion of low-cost unconventional gas supplies in North America in its decision to call off the project, according to a Dec. 22 news release.

"We recognize this is a disappointing day for the people of the North. This is a disappointment to Imperial and the other members of the joint venture, as well," said Theresa Redburn, senior vice president of commercial and corporate development at Imperial Oil.

The Mackenzie Gas Project would have involved the development of three gas fields near the Mackenzie Delta, as well as the build-out of 1,196-kilometer and 457-kilometer pipelines to deliver production to the south. It is expected to cost about C$16 billion. The project submitted regulatory applications in 2004 and received approval from Canada's National Energy Board in December 2010.

Before it was canceled, the Mackenzie Gas Project experienced a number of delays, said to be due to the regulatory process, staffing issues and the lack of a fiscal agreement, among other causes. In 2007, Imperial Oil said the project would begin service by 2014, but in 2010, it was pushed further back to 2018.

Other participants in the joint venture, which has been dissolved with the project's cancellation, include ConocoPhillips Canada, ExxonMobil Canada Ltd. and the Aboriginal Pipeline Group.