June 27, 2002 --- Vol. 8, No. 66June 2002

Mackenzie Delta producers open door to all explorers in region

The powerful Mackenzie Delta Producers Group is taking the first step to ensure all gas owners in the region have access to a pipeline along the Mackenzie Valley.

In issuing notice June 22 of a non-binding open season for space on the proposed pipeline, Imperial Oil Ltd. the senior partner in the Delta consortium said the objective is to design a pipeline that will be able to handle all the gas that is discovered and ready to be produced by start-up time, possibly 2010.

The initial design for a 1,300-mile pipeline will have capacity for output of 800 million to 1 billion cubic feet per day from the Taglu, Parsons Lake and Niglintgak anchor fields.

It will also have space for up to 500 million cubic feet per day from new discoveries or existing significant discovery licenses production that would open the way for the Mackenzie Valley Aboriginal Pipeline Corp. to obtain up to a one-third equity stake in the pipeline.

Imperial senior vice president K.C. Williams told reporters June 17 that the non-binding commitments from both Delta producers and explorers are intended to help his group assess potential gas supplies by asking prospective shippers for gas composition, resource estimates and deliverability data.

"It is quite high risk," he told reporters at a Canadian Association of Petroleum Producers' investment symposium. "The explorers have to rely on their projections of drilling activity."

But he acknowledged the role of the Mackenzie Delta Explorers Group, which includes Petro-Canada, Devon Canada Corp., EnCana Corp., Chevron Canada Resources, Anadarko Canada Corp., Burlington Resources Canada Energy Ltd. and BP Canada Energy Co., who have committed a combined C$900 million to five-year exploration licenses for the Delta.

Williams told reporters that because the group is dealing with new regulators it is difficult to predict how long the process might take, but "we are optimistic Delta volumes can be brought on stream by 2010."

He again stressed the need to get Mackenzie Delta gas to market before gas from Alaska's North Slope.

The Mackenzie Valley project is counting on spare capacity in the existing Enbridge Inc. liquids pipeline from Norman Wells, in the central Northwest Territories, to Alberta and the TransCanada PipeLines Ltd. network in Alberta.

"We can't afford to build new infrastructure just for Mackenzie gas," Williams said.

If Alaska gas were to reach southern markets first "it would not only strand Mackenzie Delta gas but would have the potential to strand other gas in Western Canada," said Williams. "There would be no space for Mackenzie Delta gas for a decade or two."

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