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Providing coverage of Alaska and northern Canada's oil and gas industry
May 2011

Vol. 16, No. 20 Week of May 15, 2011

Tuk could be in luck

Based on Korea Gas Corp. investment in MGM Energy natural gas holdings, McLeod says opportunity exists for LNG export to Korea

Gary Park

For Petroleum News

Canada’s LNG export plans could stretch from Tuktoyaktuk on the Beaufort Sea to Korea, predicts Northwest Territories Industry Minister Bob McLeod.

Speaking at the Offshore Technology Conference in Houston, he said the prospects stem from the C$30 million investment in gas holdings of MGM Energy by the Canadian subsidiary of Korea Gas Corp.

McLeod said the Koreans started to show interest in converting Canada’s northern gas into liquefied natural gas when they realized their imported LNG would cost more than what they would pay to acquire Canadian gas assets.

But he was not in a position to shed light on the possibility of Kogas shipping LNG from Tuktoyaktuk.

However, Kogas officials indicated the company was prepared to study the feasibility of importing LNG, given forecasts that the Beaufort will increasingly be free of ice and open to tanker movement.

Kogas has already paid C$20 million to MGM for its Umiak significant discovery license and is committed to paying the final C$10 million if a decision is made to construct a pipeline out of the Mackenzie Delta.

Currently, the only land access from Inuvik to Tuktoyaktuk is by ice road in the winter.

Year-round road promised

But that is about to change under the newly elected Conservative government of Prime Minister Stephen Harper which has promised C$180 million to complete a year-round road between the two communities.

McLeod is also hopeful that the majority Harper government will now feel able to complete negotiations on a fiscal framework for the Mackenzie Gas Project.

He said the government has said any assistance it offers the MGP would have to be economic on a commercial basis.

“Basically, it’s a message they don’t want to be seen as subsidizing Big Oil and Big Oil has said it is not asking for a subsidy,” McLeod told Platts Oilgram News.

He said the MGP partners have only requested a “fiscal framework that will allow them to make a go/no go decision on construction of the pipeline.”

Separately, the Dehcho First Nations of the lower NWT show signs of softening their opposition to the MGP by asking Imperial Oil to include guaranteed employment and business opportunities in a benefits and access agreement.

As well, the Dehcho have requested more money from Imperial to work on the negotiations.

Dehcho Grand Chief Sam Gargan said meetings are scheduled to explain the contents of any agreement with the Dehcho member communities.






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