October 15, 2001 --- Vol. 7, No. 132October 2001

BP will operate Sak River exploration well for partner AVCG

BP Exploration (Alaska) Inc. has applied to drill an exploration well, the Sak River No. 1, in the Sakonowyak River exploration unit on the North Slope at Gwydyr Bay. BP filed on behalf of Alaska Venture Capital Group LLC. BP holds approximately 62 percent of the working interest in the Sakonowyak River unit; AVCG holds approximately 38 percent. The 11,520-acre unit, formed July 30, contains five state oil and gas leases, offshore and onshore at the mouth of the Sakonowyak River in Gwydyr Bay.

Two exploration wells are part of the unit agreement, the first to be completed in 2003, the second in 2004. BP said that AVCG will fully fund the program and BP will retain a working interest in the prospect after the well is drilled. Drilling is contingent upon securing permits and final funding. BP said AVCG asked it to operate the well because of its North Slope experience and because it is the unit operator.

A six-mile ice road will be built from Prudhoe Bay unit S pad to the site of the exploration ice pad and the well will be drilled from an ice pad approximately 500 feet inland from Gwydyr Bay to an offshore bottomhole.

If sufficient hydrocarbons are found, the exploration well may be reused as a production well.

Gas firms sign pipeline ownership pact with NWT aboriginals

The consortium of Mackenzie Delta gas producers today moved a step closer to development by signing a memorandum of understanding that could see five of six aboriginal regions take a one-third equity stake in a Mackenzie Valley pipeline.

Reinforcing a tentative deal struck in June, Mackenzie Delta Producers Group and the Mackenzie Valley Aboriginal Pipeline Corp. have established a framework for "economic and timely development" of a C$3 billion pipeline.

The producers Imperial Oil Ltd., Conoco Canada Ltd., Shell Canada Ltd. and ExxonMobil Canada are still assessing the project's economics, but expect to start work on regulatory applications later this year.

K.C. Williams, Imperial Oil senior vice-president, said the MOU "lays the groundwork for a business relationship beneficial to the peoples of the North and to resource developers."

He said signatories to the MOU represent about 75 per cent of aboriginal people in the Northwest Territories, including the Deh Cho community in Fort Liard, although the bulk of the Deh Cho First Nations remain holdouts, pending settlement of their outstanding land claims.

But the producers' consortium decided to move ahead after a meeting earlier this month with federal Indian Affairs Minister Robert Nault, who has insisted no single aboriginal group will be allowed to block a pipeline.

The producers estimate existing Delta discoveries at 5.8 trillion cubic feet and contemplate initial shipments of 800 million to 1 billion cubic feet per day, although no start-up date has been set.

The MOU said the aboriginal corporation's initial target of one-third pipeline ownership would be incremental to the producers' initial capacity.

Gas volumes to support that share would be drawn from existing Mackenzie Delta and Valley discoveries, or from new exploration activity now under way in the area.

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