February 11, 2009 / 6:29 PM / 11 years ago

UPDATE 2-TransCanada CEO downbeat about Mackenzie line

(Adds reaction from Canadian minister)

By Bruce Nichols

HOUSTON, Feb 11 (Reuters) - Regulatory delays have worsened the odds that the C$16.2 billion ($13 billion) Mackenzie gas pipeline in Canada’s far north will ever be built despite a promise of help from Ottawa, TransCanada Corp’s (TRP.TO) chief executive said on Wednesday.

TransCanada CEO Hal Kvisle said he is frustrated that the pipeline, which would carry gas to Canadian and U.S. markets from the Mackenzie Delta on the Beaufort Sea, still does not have clearance to go ahead after years of planning and rising costs.

“I confess to some pessimism on the Mackenzie project, and it may well not proceed,” Kvisle said at an industry conference in Houston.

TransCanada has no current stake in the pipeline, but can acquire 5 percent through its commitment to fund the native-owned Aboriginal Pipeline Group, which aims to control a third of the project, which was first discussed in the 1970s.

In January, the Canadian government offered financial support for the proposal, which is led by Imperial Oil Ltd (IMO.TO). The aid would be in the form of money for roads and airstrips, as well as pre-construction expenses.

“I have great sympathy for the current government of Canada, which is doing everything it can to move the project forward,” Kvisle said. “But it inherited a mess that’s been building up for a couple of decades.”

The latest setback came in December, when one of two regulatory panels said it expected to deliver its report on the project in late 2009, months later than expected.

Asked about Kvisle’s comments, the federal minister in charge of pipelines said he was still confident the Mackenzie line would eventually be built.

“I continue to be optimistic about the project. It’s a very important project for our country,” Environment Minister Jim Prentice told reporters in Ottawa.

The 1,220 km (760 mile) pipeline would ship up to 1.9 billion cubic feet of gas a day through the Northwest Territories to Alberta, where it could be routed on existing lines to markets in Canada and the United States.

The other project partners are ConocoPhillips (COP.N), Royal Dutch Shell (RDSa.L) and Exxon Mobil Corp (XOM.N).

$1=$1.24 Canadian Additional reporting by David Ljunggren in Ottawa; writing by Jeff Jones; editing by Rob Wilson

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