National Post by Peter Foster.  Here’s a thorny question to pose as Prime Minister Stephen Harper moves about the Canadian North this week promoting Arctic sovereignty and use-it-or-lose it development: is the Mackenzie Valley natural gas pipeline dead?

A year ago, Imperial’s CEO Bruce March declared that he was as optimistic about Mackenzie development as he had been “in five or six years.” As recently as January, Minister of the Environment Jim Prentice was talking about getting “framework issues” resolved and moving forward. But whatever fiscal terms the government has offered, Imperial and its partners apparently don’t like them.

Sean Parnell, the successor to Sarah Palin as Governor of Alaska, has declared that pushing a pipeline for North Slope gas will be his top priority.

Currently, prices are hovering not far above US$3 a thousand cubic feet, a level which induces thoughts of suicide in gas producers, but the important price is the one that will prevail when northern pipelines come onstream. EnCana, North America’s leading gas producer, recently hauled down its long-term price expectations from the range of US$7 to US$8 per million British thermal units (BTUs) — which is approximately the same as a thousand cubic feet — to US$6 to US$7 per million BTUs, but others, such as Ron Brenneman, the retiring head of Petro-Canada, expect prices to stay below US$6. As he told the Financial Post’s Claudia Cattaneo recently “We know enough about these shale gas plays to understand the potential and the cost associated with development. Any time you see a little bump in natural-gas prices, which we will see periodically, you will see a corresponding increase in activity and, therefore, supply, and it will smooth itself out again. If you look at the forward curve right now for natural-gas prices… I think it’s going to stay under $6, and at that level you can’t justify conventional developments in Western Canada.”