June 24, 2009 / 9:15 PM / 10 years ago

Guarantees not offered for Mackenzie line -Canada

VANCOUVER, British Columbia, June 24 (Reuters) - The government of Canada has not discussed providing loan guarantees for the Mackenzie Valley gas pipeline project, Environment Minister Jim Prentice said on Wednesday, and he would not say if they might be considered.

Canada’s Northwest Territories is hoping to get loan guarantees to help kick-start the project, which would ship natural gas from the Arctic to southern markets, saying the financial aid may be needed to offset U.S. government support for a rival line from Alaska.

The Canadian government has made a fiscal support offer to Mackenzie’s backers, led by Imperial Oil Ltd (IMO.TO), but the details have not been made public. The pipeline’s backers have not accepted the government’s current offer.

“In the fiscal framework discussions we have had to this point, loan guarantees have not formed part of the discussion,” Prentice told reporters.

Asked if that meant the government and project backers might talk about guarantees at a future date, he answered: “I’ll simply leave it at that.”

A Northwest Territories official said this week that Ottawa may need to provide about C$20 billion ($17.2 billion) to C$24 billion in loan guarantees for the project, which would carry up to 1.9 billion cubic feet of gas a day to Alberta from the Mackenzie River Delta on the Beaufort Sea.

The Canadian territory is worried about about a U.S. Senate bill that would boost the loan guarantees for a proposed Alaskan natural gas pipeline to $30 billion from $18 billion.

Construction of the Alaska pipeline before Mackenzie would likely doom the smaller Canadian project.

$1=$1.16 Canadian Reporting Allan Dowd, Editing by Peter Galloway

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