Environmental groups slam Ottawa's financial offer to Mackenzie project

CBC, January 20, 2009 -- Federal dollars should not be going to the Mackenzie Gas Project, environmental groups said Tuesday, a day after Ottawa made a financial offer to the backers of the beleaguered Arctic natural gas pipeline.

Environment Minister Jim Prentice, who is also responsible for pipelines, said Monday that the government has offered an undisclosed amount for infrastructure and pre-construction costs as well as a sharing of risks and returns.

The move is "staggering in its irresponsibility," said Stephen Hazell, executive director of Sierra Club Canada.

The more than 1,200-kilometre pipeline would carry natural gas from the coast of the Beaufort Sea south to the Alberta boundary, where it would connect into TransCanada Corp.'s (TSX:TRP) existing network.

Prentice called the undertaking "a very important project to our country" on Monday because it offers a secure source of energy for Canada and would spur economic development in northern communities.

But there is concern that large quantities of the clean-burning fuel would be used in oilsands extraction - "the world's dirtiest oil in terms of greenhouse gas emissions," Hazell said.

Lindsay Telfer, director of the group's Prairie division, said she'd rather see government money be spent on renewable energy sources.

"Tens of thousands of Canadians across Canada are losing their jobs with the economic downturn, yet the government's response is essentially to give money away to the multinational oil industry by subsidizing Mackenzie gas and tar sands oil production," she said.

Meanwhile, the Pembina Institute said the federal offer conflicts with an independent review process expected to wrap up in December after a series of delays.

"The government is undermining the credibility of the project's review process by seeking to conduct backroom deals with the proponents of the project long before the public review delivers its recommendations," said Peggy Holroyd, director of arctic energy for the environmental think-tank.

"The news that the federal government is already working to move this project forward makes it very hard to trust that the final decision on whether the project is in the public interest will be made fairly and objectively."

The Mackenzie project is led by Imperial Oil Ltd. (TSX:IMO) and joined by ConocoPhillips (NYSE:COP) ExxonMobil (NYSE:XOM) and Shell Canada Ltd. (NYSE:RDS) as well as three aboriginal communities in the region.

Pipeline operator TransCanada Corp. (TSX:TRP) also has a stake in the project through its investment in the Aboriginal Pipeline Group.

The last official cost estimate of the pipeline was $16.2 billion in early 2007.