SHAWN MCCARTHY AND NATHAN VANDERKLIPPE
From Monday's Globe and Mail
March 16, 2009 at 3:41 AM EDT
OTTAWA and CALGARY — The budget for the panel reviewing the proposed $16-billion Mackenzie Valley Pipeline has nearly tripled amid delays that have frustrated industry and government, an internal federal report says.
The report from the Canadian Environmental Assessment Agency says the Joint Review Panel's costs have risen to $18-million, from the original budget of $6.8-million when it was established in the summer of 2004.
The review panel, headed by chairman Robert Hornal, is charged with assessing the environmental and socioeconomic impacts of the proposed 1,220-kilometre gas pipeline. Last December, the panel announced it would not finish its report in March as planned, but expected to release it at the end of this year.
The federal review of its work found that salaries alone have soared to $11-million, including more than $900,000 for the chairman, said a source who has been briefed on it.
In an interview, Mr. Hornal disputed that figure, saying that he has billed a total of $750,000 through the end of December, 2008. He is not paid a salary, but a standard federal rate of $650 a day for a position like his, he said.
"I don't think I'm overpaid or underpaid," he said. "I'm doing this as a citizen of the country and I'm working hard to do a good job on it."
Other members of the panel are paid $500 a day. Mr. Hornal said the panel itself does not set the budget - that is the responsibility of the federal and territorial agencies that oversee the panel - and the dramatic rise in costs can be attributed to the length of time it has taken to produce a report.
"Primarily, it's taken much longer than we anticipated to do the job," he said.
Stephen Hazell, the executive director of the Sierra Club of Canada and a frequent presenter before the panel, defended the expanded budget.
"It's a lot of money," he said. "But this is a one-time decision that will decide the future of the entire Northwest Territories for decades to come. When you look at it that way, $18-million is probably not that much."
The joint review panel is the first major hurdle that the project's proponents must clear. Its report will form the basis of a regulatory review by the National Energy Board, as well as environmental reviews of local site impacts.
Federal Environment Minister Jim Prentice, Northwest Territories Premier Floyd Roland and the project's proponents have all expressed their frustration with the slow pace of the review panel's deliberations. They also worry that the review panel will fail to meet its December deadline.
Nellie Cournoyea, the chair of the Inuvialuit Regional Corp., called the much-delayed review process, which will span more than five years before it is completed, "insanity."
"This whole process is just mind-boggling," she said. "It was supposed to be everybody sits together, it will be quicker. I don't know how this just ran away somehow."
Mr. Prentice, who also has responsibility for the Northern Pipeline Agency, has offered the consortium of companies a package of financial assistance that includes federal funding for infrastructure and some measure of assuming financial risk in return for a share of the profits.
Critics question whether the pipeline will ever be commercially viable, after technological advancements have reduced the cost of tapping vast amounts of unconventional gas in less remote areas of both the United States and Canada.
The seven-person joint review panel was established in August, 2004, by former Liberal environment minister Stéphane Dion to combine reviews by the federal government, the Northwest Territories and the Inuvialuit Game Council, which has treaty rights to conduct environmental assessments of pipeline projects through land controlled by the Inuvialuit.
The proponents of the Mackenzie Gas Project are Imperial Oil Resources Ventures Limited Partnership, ConocoPhillips Canada (North) Limited, Exxon Mobil Canada Properties, Shell Canada and Mackenzie Valley Aboriginal Pipeline Limited Partnership.
However, TransCanada Pipelines Ltd. has expressed an interest in becoming a partner in the project. TransCanada has already won the right to build the much larger Alaska Highway gas pipeline. Canadian officials have long worried that completion of the Alaska pipeline would make the building of the Mackenzie uneconomic.
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