Thank you, Mr. Speaker. An announcement was made recently by a US based company, Hondo Oil and Gas, that it has created a subsidiary, the Mackenzie-Porcupine Pipeline Company, to pursue the development of a large scale project to take natural gas from the Mackenzie Delta by pipeline to a new terminal near Anchorage, Alaska. From there, the gas would be liquefied for shipment to markets in China, Korea, Japan and Taiwan.
Mr. Speaker, this is an ambitious project, and it is at a very preliminary stage. The proponents will need seles contracts in several different countries, purchase agreements with the Delta producers, environmental and regulatory approvals, and billions of dollars of debt financing. Discussions on these basic requirements for a successful project have only just begun.
We should also note that gas from the Delta would have to compete with gas reserves in the Persian Gulf and Indonesia, which could be developed and transported to Asian markets at a much lower cost.
Natural gas prices, and growth in the demand for natural gas, should continue to be much higher in the Far East than in North America. It, therefore, makes sense for industry to investigate the concept of bringing gas from the Delta to these markets. If this partirular project looks realistic, then it is also possible that other proponents will come forward with different ideas about how natural gas might be transported from the Delta to the Far East. If this type of project were to be constructed, it would probably displace any large scale gas pipeline from the Delta up the Mackenzie Valley to Alberta. However, it is difficult to foresee when gas markets in North America could justify the development of a Mackenzie Valley gas pipeline. The project proposed by Hondo could open up the north to a potentially better gas market.
This proposed pipeline would not cross any caribou calving areas that we are aware of. It would be buied for most of its length, and would follow the Dempster Highway corridor as much as possible. The project would also involve the construc:tion of a small diameter liquids pipeline from the Delta to Norman Wells.
Mr. Speaker, at this point there is not enough information for the government to take a position on the proposal. It will take the companies involved several years to bring the project to the point where it could be reviewed by the appropriate regulatory agencies. In the meantime, we intend to keep an open mind and work cooperatively with the proponents. Next week representatives from Hondo Oil and Gas are planning to visit Old Crow in Inuvik to discuss their proposals with community leaders, the Gwich'in Tribal Council and the lnuvialuit Regional Corporation. The company appreciates the importance of an open dialogue with the affected communities and aboriginal organizations whose support will be of critical importance to the success of this venture. Thank you, Mr. Speaker.