Mackenzie Gas Project delay continues as costs increase 40%

Imperial Oil's Mackenzie Gas Project in Canada's Northwest Territories will be 40% more expensive than expected, putting the total price tag at $18.82 billion, Reuters reports.

The increased cost estimate is due to rising labour and material prices.

But it's not yet clear if the project will go forward.

"The Mackenzie Gas Project proponents have not yet made a decision to construct the project because of the current natural gas market conditions," Imperial said in a filing to Canada's National Energy Board (NEB), as reported by Reuters.

The Mackenzie Gas Project is a proposal to develop three natural gas fields and to transport the natural gas to southern markets via a 1,196-kilometre pipeline system.

The much-delayed project is a joint venture between Imperial, ConocoPhillips, Shell, ExxonMobil and the Aboriginal Pipeline Group.

In October Imperial announced that it was looking to revamp the Mackenzie plans after cutting spending on the project in 2012.

According to the CBC, the venture has until 2015 to start construction on the pipeline and gas fields, otherwise it will have to go through another NEB review.

The CBC also reports that Imperial Oil will not go ahead with the project right now, "as the market conditions are just not good."