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NEWS BULLETIN

October 10, 2005 --- Vol. 11, No. 81October 2005

Northern horizons beckon BG Canada E&P

Canada’s northern and western regions and possibly Alaska are about to welcome a new player in BG Group, a spinoff from the privatization 20 years ago of the British government-owned gas monopoly.

A Canadian affiliate has already made its mark, spending more than C$100 million on exploration this year, and planning a more ambitious program next year, along with establishing a foothold in the Northwest Territories.

In recent interviews, BG Canada Exploration and Production President Glenn McNamara has said the government’s frontier strategy could eventually extend from the Northwest Territories to Alaska and Canada’s East Coast.

The company sent out strong signals of its northern intentions earlier this year when it took a 75 percent share in a C$16.5 million purchase of 275,000 acres of exploration rights on two leases in the Colville Hills area of the Mackenzie Valley, with International Frontier Resources as a 25 percent partner.

BG is hoping the Mackenzie Gas Project will proceed and aboriginal regions will become more confident in dealing with their dealings with the industry, allowing more exploration land to become available.

McNamara, former president of ExxonMobil’s operations in Western Canada including the Mackenzie Delta assets, told the Financial Post that BG is in North America for the long haul and wants to be a material player in the continental market.

But the company will also move carefully in evaluating its Northwest Territories prospects before drilling.

However, the company has delivered a strong vote of confidence in the Northwest Territories by building a land portfolio. It is also large enough to be able to bide its time until the Mackenzie project comes on stream.

McNamara believes the issues standing in the way in the way of a Mackenzie pipeline will be resolved and the project will be completed ahead of an Alaska pipeline, although the Alaska plans give BG reason to keep an eye on the state for future expansion.

For now, BG is mainly focused on its 500,000 acres of undeveloped land in Alberta and British Columbia following its 2004 takeover of El Paso Oil and Gas Canada for C$455 million and subsequent land acquisitions through government auctions.

BG is open to joint ventures and is on the lookout for acquisitions as EnCana and Burlington Resources shift their attention to resource plays, such as coalbed methane.

EnCana still has a large chunk of acreage for sale on and offshore Alaska’s North Slope.

Editor’s note: The full version of this story will appear in the Oct. 16 edition of Petroleum News, available on-line this coming Friday.

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