Oil Patch Insider

Coal gas touted for Mackenzie gas pipeline by junior company

President George W. Bush is promoting the concept. So are Montana Gov. Brian Schweitzer and Alberta Premier Ralph Klein.

That’s good enough for West Hawk Development, a junior mineral exploration and development company.

Prompted by the enthusiasm of those political leaders for clean coal technologies, the Vancouver-based firm is now developing a plan to turn vast coal deposits in the Northwest Territories into synthetic gas in hopes of occupying some of the space on the proposed Mackenzie Valley gas pipeline.

West Hawk is pinning its dreams on recently acquired coal holdings near Tulita (also known as Fort Norman) and near Fort Liard.

The purchase covers all rights to 272,503 acres, with one 11,500 acre property estimated to hold reserves of 273 million tons of thermal coal, just a fraction of the billions of tons West Hawk figures its properties hold.

Mark Hart, president and chief operating officer of West Hawk, is bullish on the prospects of producing 200 million cubic feet per day along the Mackenzie pipeline route and plans to open discussions with Imperial Oil, the Mackenzie lead partner, about becoming a shipper. At this point Imperial has had no contact with West Hawk, but is open to exploring possibilities with any potential shipper.

Hart has indicated West Hawk is eying plans to build coal gasification complexes in four phases at a cost of C$400 million-$600 million per phase.

Calculations at this stage indicate the project could be economic at oil prices of only US$25 a barrel.

Trading on the TSX Venture Exchange, the company has seen its shares range from 13 cents to 87 cents over the past 52 weeks. Losses have totaled over C$1 million in the three years to April 30, 2005.

The company has other coal interests in British Columbia and mineral interests in Chile and Mexico.

West Hawk management believes coal gasification is in the “early stages of benefiting from the enormous movement in U.S. policy to derive 75 percent” of its petroleum needs from North American sources.

—Gary Park