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April 28, 2005 --- Vol. 11, No. 42April 2005

Mac work stalled: employees diverted to regulatory issues

The Mackenzie Gas Project has brought all non-regulatory work to a halt, citing “insufficient progress on key areas critical” to the C$7 billion plan for developing Canada’s Arctic gas.

Lead partner Imperial Oil said the co-venturers will stop activities such as geotechnical data gathering, a start on detailed engineering and advance work on contracting for construction.

The 200 full-time employees engaged in the project will be diverted to regulatory issues, which Imperial Senior Vice President Michael Yeager said require substantial progress to allow formal regulatory hearings to start by late summer or early fall.

He indicated that the consortium has been swamped with requests from aboriginal communities of a socio-economic nature “that are far beyond anything we were expecting.”

He said the cost of meeting just the benefits and access demands would be “many, many multiples” greater than comparable projects elsewhere in Canada.

Yeager also said the proponents want confirmation of a clear, firm regulatory review process.

“We have to understand when the hearings will start and how they will be run to give us a schedule to plan our work around,” he said. “We must have a foundation on which the project can go forward.”

Yeager said the project is already “behind schedule” and can no longer cope with “more and more months of slippage.”

He said the Mackenzie Gas Project consortium is eager to participate in education, job training and business development programs to benefit aboriginals, but requests from the Deh Cho First Nations are “far beyond” normal taxes and royalties.

Yeager said spending on the project has already exceeded C$350 million, but was unable to estimate how much spending will be lost because of the work shutdown.

Editor’s note: See story in May 1 issue of Petroleum News.

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