|
Regulator urged to put sunset date on MGP Junior explorer MGM Energy wants construction started by end of 2013, 3 years earlier than deadline requested by project partners Gary Park For Petroleum News
Canada’s National Energy Board is under pressure to impose a tight deadline of Dec. 31, 2013, for proponents of the Mackenzie Gas Project to start construction — three years sooner than the partners are requesting.
The argument was made April 13 by MGM Energy, the sole Arctic gas explorer in recent years, as the federal regulator started its final round of hearings prior to making a decision by September on engineering, safety and economic issues.
Nancy Dilts, vice president of legal and regulatory affairs for MGM, said a sunset clause is essential to ensure that northern communities, businesses and individuals as well as other Arctic investors are not subordinated to the “plans and timetables of the applicants” — Imperial Oil, Shell Canada, ConocoPhillips Canada, ExxonMobil Canada and the Aboriginal Pipeline Group.
She said it is important to all Canadians that “construction proceeds as expeditiously as possible.”
Setting a deadline would bring an end to discussions about whether the project would be realized, Dilts said.
She said that during the past four years of regulatory hearings by the NEB and the Joint Review Panel, charged with examining environmental and socioeconomic concerns, “pens have been put back in drawers, shovels have been put down and equipment and people in the north have been left to idle while one company after another has suspended exploration and investments in the north because of the uncertainty and timing relating to this project.”
Imperial looking at 2013 sanction Don Davies, an attorney for Imperial, said the Dec. 31, 2013, deadline would not work because the proponents have insisted they would not be in a position until late 2013 to decide whether to sanction the Mackenzie Valley pipeline.
Even if the stars were aligned construction would not be possible until 2014 at the earliest, he said.
Davies told the NEB that Imperial and its partners also need the necessary permits and major regulatory decisions in place and must have a reasonable assurance that their certificate would not expire before construction could start.
Dilts said MGM endorsed the MGP and has indicated its intention to process its gas on the proposed gathering system, but before it can make a shipping commitment it must “know the terms under which the pipeline company will conduct business with MGM as a producer-explorer.”
MGM, since being spun off from Paramount Resources, has drilled eight wells on the Mackenzie Delta and notched two discoveries, boosting its chances of being a major gas supplier outside of the three anchor fields.
MGM has said it is prepared to become either an equity partner in the Mackenzie gas gathering and processing facility, or to contract for 200 million cubic feet per day of firm capacity.
Competition an issue Before the final hearings started, NEB chairman Kenneth Vollman said the regulator was “looking forward to hearing the views and opinions of hearing participants on the decisions we must take.”
But some analysts are not sure Arctic gas can compete with the rapid emergence of shale gas in North America.
Judith Dwarkin, chief economist with Ross Smith Energy Group, said no one was thinking about U.S. shale gas when the MGP was revived almost a decade ago or the “structural change in the continental gas supply (that shale gas) represents.”
She noted that Canada also has its own early-stage shale gas industry, raising questions about the viability of the MGP.
Ralph Glass, an economist with AJM Consultants, asked why the MGP partners would be prepared to invest in bringing gas to southern markets from the Mackenzie Delta “when you can feed the markets with all the other plays, like the Marcellus shale or the Montney in Alberta.”
| 