November 15, 2002 --- Vol. 8, No. 120November 2002

Thetis Island exploration receives final consistency determination

The Alaska Division of Governmental Coordination said Nov. 14 that it has completed coordinating the state's review of the proposed Thetis Island oil and gas exploration project and has found the project consistent with the Alaska Coastal Management Program.

The project, proposed by Armstrong Oil & Gas Inc. of Denver, Colo., is being taken over by Dallas-based Pioneer Natural Resources Co., which has signed an agreement giving it a 70 percent working interest in 10 leases and operatorship.

Armstrong's plan called for drilling as many as three wells offshore between the Kuparuk River unit and Thetis Island in the 2003 winter season. Drilling will be from ice islands.

The Alaska Department of Environmental Conservation is requiring a fully executed contractual agreement with Alaska Clean Seas to provide response resources. DEC is also requiring more information on the ice islands and monitoring plans and procedures and is requiring that drilling into hydrocarbon-bearing formations be completed by March 31.

Dhaliwal tells aboriginals to explore other pipeline options

Canada's Natural Resources Minister Herb Dhaliwal has emphatically ruled out any federal government loan guarantees to support Native ownership of a Mackenzie Valley gas pipeline, but insists that other options are available.

"The government's current position is we don't finance pipelines and we don't fund loan guarantees," he said Nov. 14 in a conference call from India, the second time this week he has dashed Aboriginal Pipeline Group hopes of a C$70 million loan guarantee.

"There are other proposals I am aware of," he said, suggesting the APG could fund a one-third ownership of the pipeline once the project was completed at which point it "would be easier to get private funding."

Dhaliwal said that option would hinge on whether the Mackenzie Delta Producers Group, the lead player in plans to develop Delta gas and ship it to southern markets, builds the pipeline itself or turns that job over to a private company.

Nellie Cournoyea, former chair of the APG, told the Calgary Herald the group is still counting on a loan guarantee to facilitate its involvement in the design and engineering phases.

She accused Dhaliwal of "shooting from the hip," adding that the minister has yet to discuss any of his ideas with the APG.

Dhaliwal reiterated that he believes the APG has an important role to play in the pipeline project, but said the next step would depend on the recommendations of Roland Priddle, former chairman of the National Energy Board who is the government's chief negotiator with the APG.

A spokesman for Imperial Oil Ltd., which heads the Delta producers' group, said the case has been made to Priddle and other federal officials that aboriginal support for a pipeline is essential before the project can proceed.

In the meantime, he said a strong summer response from E&P companies outside the producer consortium has prompted the Delta producers to design a pipeline that could be expanded to 1.9 billion cubic feet per day from 1.2 billion cubic feet per day.

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