While a pair of major northern pipeline projects inch closer to reality, cumbersome and inefficient regulatory processes could lead to more costly delays that, in turn, could hit Canada hard in the wallet, industry players say.

The Mackenzie Valley Project and the Alaska Highway Pipeline aim to bring billions of cubic feet per day of natural gas to southern markets.

Delays, however, will cost Canada close to $60 billion in higher energy costs for end users, lost jobs and lost tax revenue to federal and provincial governments between now and 2025, a study commissioned by the Canadian Energy Pipeline Association (CEPA) says.

To avoid those shortfalls and for Canada to achieve its energy potential, a "sound investment environment" is needed that is competitive with other countries, which means providing access to the resources and improved, more efficient regulatory regimes, says CEPA president David MacInnis.

CEPA's David MacInnis says pipelines are crucial for the future.

"We are looking for a one-project, one-assessment approach," MacInnis told a Ziff Energy natural gas conference in Calgary last week.

"The taxation regime - the current regime in Canada - puts us at a competitive disadvantage vis-a-vis other countries, and that needs to be changed," he said.

"But above all we believe that governments - not one level, it's all (governments) - must use market-based principles in developing energy policy framework that enables Canada to exploit its strategic energy assets, while respecting jurisdictional authority and the need for appropriate risk-sharing between the private and public sectors."

An official with Enbridge Inc., a CEPA member that is vying for the right to carry Alaskan gas in the Canadian leg of the line, concurs with that assessment. Steve Letwin, group vice'-president of gas strategy and corporate development, calls today's regulatory framework inherently "flawed."

"I think at the end of the day we need a North American view on energy - not Alaska, not Alberta, not Ontario - we need a North American view if we're going to solve the energy issues," Letwin told conference delegates.

"That requires politicians and (pipeline) companies, and it requires producers to sit at the same table and talk about solving it. Regionalism will kill this thing and we're seeing that every day."

The CEPA study, released at the conference, reveals the impact of holdups would be greatest in Alberta and Ontario, where the cost of gas to consumers would rise by $20.2 billion and $19.1 billion, respectively.

Ontario consumers, the report says, would bear up to one-third the cost increase, followed by gas consumers in Alberta at 35 per cent and British Columbia with 13 per cent of the burden. About 74 per cent of Alberta's impact would fall on industrial gas consumers.

MacInnis contends that even as society eventually moves toward alternative energy sources, hydrocarbon pipelines will still play a big part in the economy.

"Even fuel cells, for example - the next big innovation energy technology - fuel cells themselves are going to drive that demand, but pipelines will be the enabler as they bring the hydrocarbons to market that the hydrogen will be derived from" such as in natural gas reformation technology, the main method used to produce hydrogen today.

Both the Mackenzie and Alaska lines are wading through lengthy regulatory processes that cross several jurisdictions. However, some progress is being made.

On the Mackenzie project, an Imperial Oil spokesman said last week some of the concerns that led to a shutdown of pre-construction work in April are being resolved.

"I have no hesitation in saying we're more encouraged today than we were back in April - there's been significant progress made on a couple of fronts," said Pius Rolheiser.

"We're not quite there yet, but we believe by sometime in November we'll be in a position to get back to the regulators and see where we are at that point," he added.

Imperial and its partners said last April "substantial progress" was needed on critical issues such as finalizing benefits and access agreements as well as setting timelines and a clear regulatory process.

On the Alaska Highway line, meanwhile, negotiations between the state government and the producer group, which includes British Petroleum, ExxonMobil and ConocoPhillips, have borne some fruit.

Alaska Gov. Frank Murkowski recently announced an agreement with Conoco-Phillips that meets the criteria laid out by the state including providing the state with a fair share of the revenues, access to the gas and job preferences for Alaskans on the pipeline.

Still, Ken MacDonald, vice-president Canada for BP Alaska Canada Pipelines with BP Canada Energy Co., warned that further delays put the Alaska project in jeopardy, withholding the estimated 35 trillion cubic feet of gas reserves from thirsty markets across the continent.

"If there are regulatory or legal delays, once again this stranded gas will be sitting in the North Slope of Alaska and one of the best and significant finds to bring gas to market will be unable to earn a return," he said at the conference.

Representative Ralph Samuels of the Alaska legislature said the state is trying to expedite the process, but added that it relies heavily on returns from its natural resources and therefore must proceed carefully.

He added that Alaskans are concerned about what happens on the Canadian side of the pipeline project.

"Are we going to be stopped at the border by Canadian problems (with First Nations groups)? Will delays in Canadian bureaucracy hurt our chances to get our gas to market? These are important questions in Alaska," Samuels told delegates.

Other northern jurisdictions are keeping a close watch on both pipelines.

Yukon Minister of Energy, Mines and Resources Archie Lang noted that both projects are keys for developing the territory's own natural gas resources.

"Yukon's potential cannot be fully developed until infrastructure is in place to transport our natural gas to market," Lang said in his presentation.

"With the building of these two pipelines on the horizon, Yukon's abundance of natural gas resources will make it an attractive place to explore," Lang said.

"That is why it's more important than ever to make the Yukon a competitive jurisdiction for oil and gas development."

Since taking over the administration of its natural resources from the federal government in 1998, the territory has awarded four exploration certificates to industry and looks to issue a fifth early next year.

"We are encouraging the NEB to include a pipeline extension policy as well as establishing a basin-open tolling design for the Mackenzie Gas Project so that it will be attractive for industry to ship Yukon's natural gas to market," Lang said.

Alberta Energy Minister Greg Melchin also weighed in, saying the province backs both pipelines, but not at the expense of promoting its own interests.

"We do view that we need all the sources of natural gas wherever they come from, be it Alberta or be it the North, so we support it in that context. We're just trying to make sure we're clear about the Alberta objectives, the Alberta (natural gas) hub and how that can work to both of our benefits," he told reporters following his presentation.

Melchin added that as coalbed methane production continues to grow, the gasification of coal becomes more feasible and emerging technologies extend the reserve life, Alberta will continue to be a major player supplying North America's natural gas needs.

"We want to continue to reinforce (the message) that we've only just begun to tap into the resources here in Alberta, not just the oilsands, which the world has finally acknowledged, but also with the gas resources."

-with files from The Canadian Press

(John Ludwick can be reached at ludwick@businessedge.ca)