By Keith Halliday -- Time isn’t on the Mackenzie Valley pipeline’s side.
The Schleswig-Holstein question is so complicated that only three people ever understood it. One died, the second went mad, I was the third and it’s been going on so long I’ve forgotten all about it.”
That’s how former British Prime Minister Lord Palmerston described the 19th Century diplomatic dispute over Germany’s Schleswig-Holstein region, which dragged on for almost two decades. But substitute “Mackenzie Valley pipeline” for “Schleswig-Holstein” and the quote works in Inuvik today.
To the casual observer, it does not seem that complicated to approve a pipeline. Get the pipeline company to submit an application. Research the social, environmental and economic pros and cons. Have some public hearings and make a decision.
According to the pipeline enthusiasts at Simdex, there are over 500 projects being planned around the world. Many are even getting built. Australia’s 1,500-kilometre Dampier project, for example, had its environmental screening in 2006. Its first stage opens this month.
The Dampier pipeline was less complex than the Mackenzie since a pipeline corridor already existed, but our cousins down under likely wouldn’t let more than five years drag on from application to the publication of the socio-enviro-economic assessment. That’s the timeline the Mackenzie’s Joint Review Panel (JRP) currently has in mind.
Let’s remind ourselves of how long this has been going on. In 2001, the oil companies – Imperial Oil, ExxonMobil, Shell and ConocoPhillips – signed a deal with the Aboriginal Pipeline Group. In 2004, they made their application and governments set up the JRP to study the project.
The companies’ project website still gamely says they hope to have gas flowing as early as 2010. Not likely. The JRP won’t issue its report until December 2009, more than two years after the last public hearing. Plus, we don’t know if the panel will achieve its self-imposed deadline.
Impatient Northerners need to acknowledge the extraordinarily complex issues at hand. The Mackenzie ecosystem is vulnerable and we have limited knowledge of how a project of this magnitude would affect it. There are dozens of federal, territorial and native government agencies involved, covering a daunting array of environmental, economic and constitutional issues. Over 4,000 different permits are required.
Nonetheless, it’s time to ask some tough questions. Why can’t the JRP go faster? Its website lists 21 staff and advisors. Does it need more or different ones? Who put the panel in place without clear deadlines? And why haven’t territorial ministers, federal officials and aboriginal leaders intervened and fixed the delays?
One reason is the pipeline’s mixed support in the NWT. The pro-development lobby is strong, highlighting the benefits of a $16.2-billion project. But the forces against it are strong too, looking for more evidence of sustained benefits to Northerners, especially aboriginal people.
In this situation, with a booming economy (so far) and generous federal transfer payments, politicians have sensed that few voters are clamoring for a timely decision. No major political leader has staked his or her career on getting the pipeline built.
Northerners have to remember that if the decision is delayed too long, it may end up getting made in Houston. The global economic turmoil is undermining the Mackenzie business case and sharpening competition between it and other projects around the world.
With the global credit crunch, it’s tougher to raise money for projects and $16.2-billion is a big number. But this is where it’s useful to have “Big Oil” involved. ExxonMobil has a rare AAA credit rating. It is still proceeding with major projects such as a New Guinea liquefied natural gas project estimated to cost $11-billion (U.S.) and Dow Jones recently reported that ExxonMobil executives were still confident they could borrow the billions needed thanks to the “weather proofing” provided by its AAA rating.
Still, there is the risk falling oil prices will force oil companies to slash capital spending. Head offices are pressuring project teams around the world, including those covering Northern Canada, to cut projects that will not generate revenue soon.
So the question is whether our political leaders will push for a decision – one way or the other – or possibly watch as Mackenzie gradually slips down the list in Houston. In 1866, German C hancellor Otto von Bismarck broke the Schleswig-Holstein logjam by sending in the Prussian army. NWT leaders don’t have that option, but they need to think of something. And soon.
Keith Halliday is a Whitehorse-based management consultant and a regular UHB columnist.
