Shale Gas May Aid Delayed Arctic Pipeline

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"New gas supplies may encourage a shift from coal to gas."

Newly secure gas supplies across the continent may convince more electricity producers to shift to gas-fired generation from coal, creating additional demand for Arctic gas, said Bob McLeod, the territory's minister of industry, tourism and investment.

McLeod took the message to Washington this month in his latest trip to sell the benefits of the C$16.2 billion ($15.3 billion) Mackenzie pipeline project to U.S. lawmakers, as his frustrations, and those of his government, build over the glacial pace of development.

"One of the concerns for large utility companies in the past has been the unpredictability of prices, and now with the abundance of natural gas in the United States, natural gas will be a lot more reliable and predictable," McLeod told Reuters.

Some analysts have said shale gas discoveries made in recent years in numerous regions of Canada and the United States—such as the Horn River in British Columbia and Marcellus shale in Pennsylvania and New York state—could hamper expensive developments to tap massive reserves in the Northwest Territories and Alaska.

The Mackenzie pipeline would ship about 1.2 billion cubic feet a day of gas to Alberta's gas hub from the Mackenzie River Delta on the Beaufort Sea. From there it could be routed to several North American markets on existing lines.

The Northwest Territories is banking on the project to boost economic development in the sparsely populated region of Northern Canada.

Imperial said in March that it does not expect to make a sanctioning decision until 2013, with commercial operations estimated in 2018.

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