Reparo Energy Partners Corp. (NSEFD)

[NYBob]

To 'flaco1' on 'Northern Sun Exploration Company Inc.'

Highway could cut pipeline costs
Global warming a factor

Claudia Cattaneo
Financial Post

Friday, September 22, 2006

CALGARY - A $700-million highway to the Arctic Ocean -- and global warming -- could save the $7.5-billion Mackenzie Valley Pipeline from escalating costs by speeding up construction to as little as one year, Northwest Territories' Premier said yesterday.

Joseph Handley renewed a pitch for federal funding for the project yesterday in a meeting in Ottawa with Jim Prentice, federal Minister of Indian Affairs who's also responsible for the Mackenzie project. In an interview, Mr. Handley said there's new urgency to build a "road to resources".

The highway from the southern Northwest Territories to Tuktuyaktuk would help proponents of the pipeline, led by Imperial Oil Ltd., with badly needed infrastructure.

While the concept has been around for years, such a project has become urgently needed because the pipeline is now threatened by escalating costs that could make it uneconomic, he said.

A permanent road would permit construction year round, not just in the winter when the ground is frozen and heavy equipment can be moved, squeezing construction to a year to 18 months, rather than the three consecutive winters now planned.

It would also help other growing sectors such as mining and tourism, while increasing community support for the pipeline, Mr. Handley said.

There are so few roads in the North, people and equipment move by barge on the Mackenzie River or by air, increasing the cost of doing business and people's cost of living, he said.

Ice roads are used extensively in the winter -- but they are becoming less reliable because of global warming, he said.

"With the warming temperature in the North, we have to invest in infrastructure. There is no question about it," he said.

Oil companies proposing the 1,200 kilometre pipeline, which was seen as marginally economic when its cost was set at $7.5-billion, are working on a cost review that is expected to reveal a significant increase.

Imperial and partners ConocoPhillips, Shell Canada Ltd. and the Aboriginal Pipeline Group are planning to build the line during the winters from 2008 to 2011.

"Imperial and their partners will build [the pipeline] if it's an economically viable project," Mr. Handley said. "They will not build it if the costs and challenges go beyond what they feel is a reasonable risk, and one way of overcoming a big hurdle for them would be to get on with a big piece of public infrastructure."

Mr. Prentice said the concept of building a highway has been around for some time and remains "grist for the mill."

"One would assume on the face of it that it would, but certainly [those] inquiries indicated, at least at that time, with the construction plans that were then afoot, that it didn't have a major bearing on the cost," he said in an interview. "But, it's important to point out that Imperial has been reassessing their costs over the last three months."

Initially, the highway could be a gravel road passable all year that could be improved as revenue from resource development increased, Mr. Handley said.

Pius Rolheiser, a spokesman for Imperial, said pipeline planners are still working on the assumption construction will take three winters to complete, but the planners are open to ways to shorten the construction window.
National Post 2006
www.canada.com
Posted by Doug

http://www.investorshub.com/boards/board.asp?board_id=5526