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Canada pipeline project abandoned in wake of tanking gas prices

The Mackenzie Valley Pipeline, an energy megaproject in Canada's North that has been proposed and debated for decades, is on hold again.

The 743-mile line would have transported natural gas from the Beaufort Sea to North American markets. Low natural gas prices forced the halt of the $16.2 billion project.

ConocoPhillips said Thursday that the five partners in the energy-development consortium have suspended funding for the project, which would have transported up to 1.2 billion cubic feet of natural gas a day.

The partners include an aboriginal group funded by Calgary-based TransCanada Corp, Exxon Mobil Corp., Royal Dutch Shell and Imperial Oil Ltd., also of Calgary.

"The co-venturers elected to suspend funding of the project due to a continued decline in market conditions and the lack of acceptable commercial terms," it said in a release.

The announcement follows a decision less than a week ago by ExxonMobil, ConocoPhillips, BP and TransCanada, to work toward developing natural gas reserves on Alaska's North Slope, which would be assessed as an alternative to a natural gas pipeline through Alberta.

Canada's National Energy Board approved the MacKenzie Valley project in December of 2010. The price of natural gas, already at a 10-year low, fell further Thursday after the U.S. government reported a surprisingly large increase in supply. Gas for May delivery fell four cents to $2.11 per thousand cubic feet in New York at midday.

The government said supplies expanded last week to a level that's 60.5 per cent higher than the five-year average.

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