CALGARY - The proposed Mackenzie natural gas pipeline has received a final nod of approval from Ottawa, bring to a close seven years of regulatory filings and decades of planning.

The certificate of public convenience and necessity issued by the NEB Thursday enables the 1,196-kilometre Arctic pipeline to proceed should backers of the $16-billion project decide to move forward on the line.

The announcement was hailed as a regulatory milestone by lead proponent of the $16-billion project, Imperial Oil, which first filed for approval on the Mackenzie pipeline in 2004.

"It's the conclusion of the formal regulatory process, so we are very pleased to have that in hand," said spokesman Pius Rolheiser.

The consortium of producers and aboriginal groups backing the project now have until 2013 to report to the board on its decision about proceeding with the project or not.

In the making since the late 1970s, the Mackenzie pipeline project has stalled on red tape, poor natural gas pricing outlooks and lack of conclusive federal support.

The pipeline would run from the Beaufort Sea to northwestern Alberta, and is designed to carry up to 1.2 billion cubic feet of natural gas per day.

The project includes development of three natural gas fields, a gathering system and processing plant, plus a 457-kilometre pipeline to carry natural gas liquids from Inuvik, NWT to an existing oil pipeline at Norman Wells, and other related facilities.

But key to bringing the massive pipeline to fruition lies more with the market rather than what boils down to a formality, said analyst Steven Paget, with FirstEnergy Capital Corp.

The project would need $6-$8 US natural gas prices to go forward, a prospect not in the books until at least 2015 when prices are forecast to reach $5.50 US, he said.

Natural gas futures have averaged $4.198 US per million British thermal units in the past 12 months. The resource closed at $3.818 US on Thursday.

"The project is in competition with shale gas basins a lot closer to existing infrastructure and populations," Paget said. "And those projects are likely to go first."

Technologies such as horizontal drilling and multi-stage fracturing have unleashed a tidal wave of shale gas resources onto the North American market in the past two years. The abundance of accessible natural gas, heated drilling activity south of the border and soft industrial demand has pulled down prices for conventional volumes, putting more costly reserves such as Arctic gas in jeopardy.

"The problem that we've got with the Mackenzie pipeline and the Alaska pipeline is the price of gas today doesn't justify the kind of investment that's needed to build it," said Alberta Energy Minister Ron Liepert Thursday. "If that investment is made, it would be good for Alberta, but there are challenges to overcome and they are economic rather than environmental and land concern issues."

Imperial has long called for government support for the project, pointing to incentives offered the rival Alaska natural gas pipeline.

In January 2009, Ottawa said it would be providing a fiscal framework to support infrastructure associated with the pipeline, such as roads, but discussion were put on hold last summer pending the outcome of the regulatory process.

In December the NEB gave its conditional green light to the Mackenzie project, with the recent approval by the federal cabinet the last page.

"Now with that process formally concluded, our intent would be to re-engage in those discussions, Rolheiser said. "Our objective has been and remains to work with the federal government to develop a fiscal framework for the project that provides an appropriate balance of risk and benefit, both for the proponents and for the government of Canada."

Partners in the massive project include the Mackenzie Valley Aboriginal Pipeline Limited Partnership, ConocoPhillips Canada, Shell Canada and ExxonMobil Canada.

The consortium will need to obtain more than 6,000 additional permits and authorizations from other boards and government agencies before construction could start, Rolheiser added.

With files from Jason Fekete

domeara@calgaryherald.com