The abandonment of the Mackenzie Gas Project (MGP) in 2017 appeared, at the time, to sound a second death knell for the potential commercial development of the extensive natural gas reserves in the Mackenzie Delta. After a protracted regulatory review, over more than seven years, the MGP received final approval in 2011 and a certificate of public convenience and necessity, and other authorizations were issued by the National Energy Board (now known as the Canada Energy Regulator). By 2017, however, declining natural gas prices led to the MGP sponsors announcing that they had decided not to proceed.^[1]

The demise of the MGP followed exactly four decades after the release of the 1977 report of the Mackenzie Valley Pipeline Inquiry, generally known as the Berger Report. Mr. Justice Thomas Berger had been appointed by the federal government to review a predecessor project, the Mackenzie Valley Pipeline, which was described at the time as what would be one of the biggest projects in the history of free enterprise. The Berger Report, Northern Frontier, Northern Homeland,^[2] recommended that there should be a 10-year moratorium before any such pipeline was approved, principally to allow for the settlement of Aboriginal land claims in the areas that would be impacted by the project. As a result, the Mackenzie Valley Pipeline proposal proceeded no further, until the MGP began to emerge in the early 2000s.

With two strikes, and natural gas prices continuing to be depressed, it has appeared unlikely that the Mackenzie Delta gas would ever be developed. Recently, however, a third, nascent development scenario has appeared. Rather than proposing another Mackenzie Valley pipeline to North American markets, the scenario contemplates the direct export of natural gas from existing onshore fields as liquefied natural gas (LNG) via an offshore liquefaction and loading facility.^[3]

In 2019, the Government of the Northwest Territories (GNWT) contracted a pre-feasibility study “to determine if it would be viable to process natural gas from the onshore Mackenzie Delta and transport it for sale to international markets.”^[4] The study was funded by both the GNWT and the federal government’s Canadian Northern Economic Development Agency (CanNor) and was completed in 2021. It concluded that “the responsible development and export of Mackenzie Delta Liquefied Natural Gas (MDLNG) has enough merit to, at least, warrant a full study.”^[5]

The GNWT has released a document that it says is not intended to support or advance a specific LNG project “but to provide context for the GNWT’s prefeasibility study and its data and awareness among NWT residents and industry of the potential that exists in advancing liquefied natural gas from the Mackenzie Delta to international markets needing this energy alternative.”^[6] At the same time, the document states that “[a]n export project would further assert Canada’s Arctic sovereignty and give international investors a compelling Northern option as they look to diversify their energy portfolios by backing developments with high Environmental, Social and Governance (ESG) standards in jurisdictions with robust regulatory regimes.”^[7]

Significantly, noting that the Mackenzie Delta natural gas reserves are entirely located in the Inuvialuit Settlement Region (ISR), those reserves “would only move with Inuvialuit support, in whatever form that takes.”^[8]

It is interesting to note here that the Inuvialuit Regional Corporation, through a subsidiary, is currently advancing the Inuvialuit Energy Security Project Ltd. (IESPL) to develop a gas well located in the Mackenzie Delta near Tuktoyaktuk^[9] and transport the gas as compressed natural gas (CNG) by truck to consumers in the region, particularly in Inuvik. The IESPL, which was authorized by the Canada Energy Regulator in March this year, would replace Inuvik’s gas supply, which has been largely served by liquefied natural gas and propane trucked from southern Canada since production from the nearby Ikhil gas field began to decline in recent years.^[10] Interestingly, the IESPL has been widely supported by regional organizations.^[11] The extent to which there would be regional support for a much different large-scale project such as MDLNG is, however, purely speculative at this time.

Should MDLNG ever proceed to a project proposal, the complexity of the regulatory framework, invoking multiple jurisdictions, would likely rival, if not exceed, that of the MGP, a process that extended over more than seven years.

* Rowland J. Harrison, Energy Regulation Consultant, Co-Managing Editor, Energy Regulation Quarterly.

1. “Mackenzie gas project participants end joint venture”, Imperial Newsroom (22 December 2017), online: <news.imperialoil.ca/news-releases/news-releases/2017/Mackenzie-gas-project-participants-end-joint-venture/default.aspx>.
2. Government of Canada, Northern Frontier, Northern Homeland: The Report of the Mackenzie Valley Pipeline Inquiry, vol 1 (1977) Ottawa, Privy Council Office (The Report of the Mackenzie Valley Pipeline Inquiry by the Honorable Thomas R Berger) online (pdf): <publications.gc.ca/collections/collection_2015/bcp-pco/CP32-25-1977-1-eng.pdf>.
3. Northwest Territories, Government of Northwest Territories, Mackenzie Delta — Liquefied Natural Gas, (7 July 2023), online (pdf): <www.iti.gov.nt.ca/sites/iti/files/1398-ITI-MDLNG-Report_ENG.pdf>.
4. Ibid at 4.
5. Ibid.
6. Ibid at 15.
7. Ibid at 5.
8. Ibid.
9. The TUK M-18 well, which, ironically, was included in the reserves underpinning the MGP.
10. Canada Energy Regulator, Inuvialuit Energy Security Project Ltd. — Application for Authorization for Installation and Operation of the Energy Centre (Commission Letter Decision C28698-1) (7 March 2024), online: <docs2.cer-rec.gc.ca/ll-eng/llisapi.dll/fetch/2000/90464/2487702/4236825/4236826/4264193/4439889/C28698-1_Commission_ Letter_Decision_–_IESPL_–_Inuvialuit_Energy_Security_Project_-_Authorization_for_Installation_and_ Operation_of_the_Energy_Centre_–_OA-1414-003_-_A8W7Y3.pdf?nodeid=4439890&vernum=-2>.
11. Ibid at 6.