Imperial Oil Ltd. has halted operational work on the $7-billion Mackenzie gas pipeline plan in the Northwest Territories, citing a lack of progress on moving the major energy development forward.
Canada's largest oil and gas producer said it would stop "project execution activities,'' including the start of formal regulatory hearings scheduled to start this summer.
Imperial and its partners say "substantial progress'' is needed on critical issues such as finalizing benefits and access agreements as well as setting timelines and a "clear'' regulatory process.
"There are expectations and demands that have been placed on our project that are far beyond its scope and responsibility,'' Imperial's senior vice-president Michael Yeager said last week.
The energy companies plan to halt all engineering and preparatory work, as well as geotechnical data gathering until the larger "foundation'' issues are dealt with.
The announcement could be a major setback for the mega-project, which called for a pipeline stretching about 1,220 kilometres south from the Mackenzie Delta in the Northwest Territories to existing pipeline networks in northern Alberta.
The pipeline is intended to meet the growing demand for natural gas as conventional supplies throughout North America continue to wane.
But there has been little progress since, with the energy companies saying they are being hampered by things well beyond the responsibility of the project, such as land-claims issues.
Imperial said both the federal and territorial governments have responsibilities "for some of these broader programs,'' as well as the aboriginal groups themselves for expectations about the project.
The surprise development could be seen as an attempt to put pressure on the federal government and native groups to break the various logjams over land-use agreements and economic and social benefits that have delayed the project's development.
"We certainly did not make a decision to stop the project - we've made a decision to continue, but to focus on these priority issues,'' Yeager told a conference call.
"This decision was based on one thing, and one very important thing, and that is that we feel that this project is do-able.'' One group that has opposed the pipeline plans is the Deh Cho First Nation. About 40 per cent of the proposed pipe'-line route is currently within Deh Cho lands, which cover virtually the entire southwest corner of the N.W.T.
The Deh Cho have been attempting to get Ottawa to settle their outstanding land claim before the pipeline is developed and have taken the federal government to court over the impending environmental review process.
