After decades of anticipation and months of dealing, the key pieces are in place for a C$5 billion gas project in Canada’s Mackenzie Delta.
Northwest Territories aboriginals, Delta gas owners and Calgary-based pipeline TransCanada said today that they have reached an agreement on funding and participation in the first project to tap the Arctic gas fields of North America.
That clears the way for applications to be filed with regulatory authorities in 2004.
A statement by Imperial Oil, leader of the Mackenzie Delta Producers Group, on behalf of the various parties, including the other gas owners — ConocoPhillips Canada, Shell Canada and ExxonMobil Canada — said that if the necessary regulatory and right-of-way approvals are obtained followed by a decision to build a pipeline gas production could start before 2010.
The targeted start-up is less ambitious than some earlier forecasts of deliveries in excess of 800 million cubic feet per day by 2008, but reaching the funding agreements has taken about eight months longer than expected.
Imperial said the “specific timing will be dependent on the support and cooperation of all parties — regulatory authorities, landowners and governments.”
K.C. Williams, president and chief executive officer of Imperial Oil Resources, said the agreements enable the Aboriginal Pipeline Group to become a full participant in the Mackenzie Valley pipeline.
The missing link involves about C$80 million from TransCanada to let the Aboriginal Pipeline Group participate in the C$250 million project definition phase of the pipeline that includes preliminary engineering and environmental studies.
In return, the Delta producers will offer TransCanada the option of a 5 percent ownership share in the anchor capacity.
If any of the producer group companies sell or reduces its ownership interest, TransCanada will have the opportunity to acquire 50 percent of any opportunities.
Should firm shipping commitments rise above anchor field capacity or future expansions of the pipeline be required, the Aboriginal Pipeline Group will be entitled to first increase its interest up to one-third for 10 years after start-up.
Natural gas liquids from the Delta project will connect with the existing Enbridge-owned pipeline from Norman Wells in the central Northwest Territories to Zama in northern Alberta.
Aboriginal Pipeline Group Chairman Fred Carmichael said the agreements “establish the framework for an unprecedented partnership between the aboriginal population and industry.”
