Mackenzie Valley Pipeline facts for kids

The Mackenzie Valley Pipeline was a big idea for a pipeline in Canada. It was planned to carry natural gas from the Beaufort Sea in the far north. This gas would travel through Canada's Northwest Territories. Then, it would connect to other gas pipelines in northern Alberta.

The project was first suggested in the 1970s. But it was stopped after a special investigation. The plan was brought back in 2004. This new idea was to move gas through the sensitive arctic land called tundra. Scientists believed there were huge amounts of natural gas in the Mackenzie Delta and Beaufort Sea areas. After many delays, the project was officially given up in 2017. The main companies involved decided it was too expensive. Also, the process to get approval took too long.

History of the Pipeline Project

People first thought about building a pipeline in the 1970s. This was to bring natural gas to energy markets in North America. A special investigation, called the Mackenzie Valley Pipeline Inquiry, looked into the idea.

During this inquiry, a judge named Justice Berger listened to many different groups. These groups had an interest in the pipeline. The inquiry was important because it gave a voice to the First Peoples. These are the native groups whose traditional lands the pipeline would cross.

Justice Berger suggested that the pipeline should be put on hold for 10 years. He thought this time was needed for land claims to be settled. Land claims are agreements about who owns certain lands. He also felt the First Peoples needed time to get ready for such a big project.

Before the government could act on Berger's report, a new government was elected. Later, in 1980, the Liberal government approved a different oil pipeline. This one went from Norman Wells to Zama, Alberta. It crossed lands where land claims were still not settled.

Exploration for gas continued steadily. By 1995, over 1,900 wells had been drilled north of the 60th parallel. Also, many aboriginal groups settled their land claims. The Inuvialuit were first in 1984. Then came the Sahtu and Gwichʼin groups.

By the late 1990s, companies started thinking about the pipeline again. The Canadian government sold rights to drill for minerals. This brought in C$400 million in bids. Companies also promised over C$1 billion for future work.

With some land claims settled, oil and gas companies began talking with local aboriginal groups. These talks were successful in October 2001. Companies like ConocoPhillips, Shell, ExxonMobil, and Imperial Oil signed an agreement. They signed it with the Aboriginal Pipeline Group (APG). The APG was formed to represent the Inuvialuit, Sahtu, and Gwichʼin. This agreement offered the APG a financial share in the pipeline.

On June 19, 2003, the Aboriginal Pipeline Group and TransCanada Corp. signed another agreement. This gave the aboriginal groups of the Northwest Territories one-third ownership of the pipeline project.

On March 11, 2011, the Canadian government approved the Mackenzie Valley pipeline. The National Energy Board also gave it a special certificate.

By 2016, the estimated cost of the pipeline had grown to almost $16 billion. The companies had permits to build until 2022. However, several things changed. There was more cheaper natural gas available in North America. Also, getting approval took much longer than expected. Because of these reasons, the main companies, led by Imperial Oil, announced in 2017 that they were stopping the project.

Pipeline Details

The pipeline was designed to carry about 18.5 billion cubic meters of gas each year. It would have been 758 miles long. The total cost of the project was estimated at C$16.2 billion.

This cost included C$3.5 billion for the system that gathers the gas. Another C$7.8 billion was for the pipeline itself. An additional C$4.9 billion was for other projects. These were planned for three gas fields in the Mackenzie River delta. The pipeline was hoped to start working by 2010, or at the earliest, 2014.

Pipeline Route

The pipeline was planned to go south through the Mackenzie Valley. It would pass through Fort Simpson. Then, it would continue south into Alberta. Once in Alberta, the pipeline would connect to the pipelines that already exist there. This would allow the gas to be sent across Canada and to the United States.

Companies Involved

A group of companies, called a consortium, was going to build the pipeline. This group included Imperial Oil (34.4%), The Aboriginal Pipeline Group (33.3%), ConocoPhillips Canada (North) Limited (15.7%), Shell Canada Limited (11.4%), and ExxonMobil Canada Properties (5.2%).

A special part of this plan was that the First Nations groups were involved. They participated through the Aboriginal Pipeline Group (APG). The APG had the chance to own one-third of the pipeline. The four oil companies (Imperial Oil, ConocoPhillips Canada, Shell Canada, and ExxonMobil Canada Properties) owned the gas fields. They also owned a gas processing plant near Inuvik. Plus, they owned a pipeline for liquids from Inuvik to Norman Wells. They also had a two-thirds share in the main gas pipeline.

TransCanada Corp. did not directly own a part of the project. But they helped the Aboriginal Pipeline Group financially. Some people thought TransCanada might take control of the project later.

Environmental Concerns

Many environmental groups were worried about the pipeline project. The Boreal Forest Conservation Framework wants to protect half of Canada's northern boreal forest. The Mackenzie Valley is part of this huge forest.

Groups like the World Wildlife Fund of Canada pointed out a problem. In the Northwest Territories' Mackenzie Valley, there are 16 different natural areas called ecoregions. Only five of these areas had enough protected areas. The pipeline would cross or be near many of these ecoregions.

The Sierra Club of Canada was against the pipeline. They believed it would harm the environment. They worried it would break up the forest along the Mackenzie River. This could damage the homes of animals like Woodland Caribou and Grizzly bear.

The Sierra Club also argued that the gas from Mackenzie would help develop Alberta's Oil sands. They said this oil is very harmful to the Earth's atmosphere. The Pembina Institute also said that the carbon dioxide from the Mackenzie gas project would increase Canada's greenhouse gas emissions. This would make it harder for Canada to meet its Kyoto Protocol goals.

Pipeline and Other Projects

Some people thought the Mackenzie Valley Pipeline would compete with the Alaskan Natural Gas Pipeline. However, these two projects would get gas from different places. The Alaska pipeline would get gas from Alaska's North Slope. The Mackenzie Gas Project would get gas from the Beaufort Sea and Mackenzie Delta in Canada.

Building the Mackenzie Gas Project would also create a main pipeline through the Northwest Territories. This would make it possible to get gas from other fields on the NWT mainland. These fields are currently hard to reach. The Mackenzie pipeline would connect to Alberta's existing pipelines. This would allow gas to be sent across Canada and to most major U.S. markets.

Governments in Canada and the U.S. want to use cleaner energy. They also want to rely less on oil from other countries. Because of this, it was expected that the demand for natural gas in North America would grow. So, both the Mackenzie Gas Project and the Alaska Gas Pipeline might have been needed to meet the energy needs of the continent.

Economics of the Project

When the pipeline project was brought back, natural gas prices in North America were high. They reached their peak in December 2005. But by the time the project was approved, prices had dropped a lot. This happened because there was a lot of gas available in the United States. This was due to more shale gas production.

The lower gas prices made the project much less profitable. This put the future of the pipeline in doubt. Ultimately, the low prices were a major reason why the project was abandoned.