Mackenzie Pipeline Costs Rise

Costs for the troubled Mackenzie gas pipeline could top the last estimate of C$16.2 billion, “T-Rex” Tillerson, Exxon’s CEO has warned.
“It could be C$16 billion or C$14 billion or C$20 billion,” Tillerson reports the Dow Jones newswire. “All we can say is that it’s large, it’s larger than we previously thought.” Rapid cost inflation has been hiking up project costs while the pipeline has been in regulatory limbo, he added. “We’re seeing what happens on other projects…(there’s) a bit of extrapolation from those more detailed cost estimates,” he said.

The project, first discussed in the 1970s, aims to bring gas from the Mackenzie delta at the northern tip of the Northwest Territories to Alberta, where it would connect to existing pipelines. The push to revive the project started gathering support in 2004, but public hearings only began in January 2006, while the startup date has been pushed back three years to 2014.

After the regulatory proceedings, the Mackenzie consortium will have to do a “thorough update” of costs and “see how we are from an economic standpoint,” he said. He denied, however, that ExxonMobil was shelving the project.