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NEWS BULLETIN

September 12, 2002 --- Vol. 8, No. 94September 2002

Exxon-controlled Imperial Oil accelerates Mackenzie Delta gas development

Imperial Oil Ltd. wants fast-track regulatory approval to allow natural gas to start flowing from the Mackenzie Delta in 2007 — one year sooner than originally anticipated. Imperial is Canada's largest oil company and 69 percent owned by ExxonMobil.

Tim Hearn, newly appointed chief executive officer of Imperial, told an investment conference in Toronto Sept. 11 that “every effort is being me to advance this project as quickly as possible.”

He said those efforts include trying to shorten the regulatory process and establish an accelerated construction schedule for a pipeline along the Mackenzie Valley.

At the same time Hearn said there is no reason why gas from the North Slope shouldn't come to market.

"But I think if think if you look at our project, which builds on a lot of existing infrastructure and is of the size and nature that would be amenable to the marketplace, it just seems that the project should go ahead now," he said.

"That is why we are trying to push ahead and we think the window is appropriate."

Hearn said plans to develop the Mackenzie Delta reserves would proceed regardless of whether the United States approves a subsidized floor price for North Slope gas.

"I believe ultimately market forces will prevail in this whole process and our view is that we have a very viable project and we are going to continue to develop it on a non-subsidized basis." he said.

Hearn said Imperial — the lead partner in the Mackenzie Delta Producers Group along with Shell Canada Ltd., Conoco Canada Ltd. and ExxonMobil Corp — will file a formal application in the next few weeks with Canada's National Energy Board.

The announcement came one day after Canada's Natural Resources Minister, after meeting with key U.S. legislators in Washington, D.C., said the lawmakers told him they were worried about the economic distortion resulting from subsidies for an Alaska Highway pipeline.

Dhaliwal said those representing states that produce natural gas also said they feared gas producers in the Lower 48 would ask for matching subsidies.

However, Roland George, a principal with oil and gas consultant Purvin & Gertz, said that even if the U.S. Congress rejects subsidies that would not close the door to less direct support, such as loan guarantees. "Support for Alaskan gas development is not dead, far from it," he told The Globe and Mail, a Canadian national newspaper.

Wilf Gobert director of research at Peters & Co., said Imperial's stepped-up schedule endorses what has become increasingly evident, that the Mackenzie Delta gas owners believe they already have the reserves to launch a commercial project.

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