Whatever hopes might still exist for development of Canada’s stranded Arctic natural gas this decade, they are being carefully guarded by the key players.
Beyond unwavering optimism in the Northwest Territories government that gas will flow down the Mackenzie River Valley and assurances from lead partner Imperial Oil that “dialogue” continues with the Canadian government to negotiate a fiscal framework, hard information is scarce.
Not what might have been expected given that it is now a full year since Canada’s National Energy Board issued a benchmark Certificate of Public Convenience and Necessity to the Mackenzie Gas Project, or MGP, applicants and considering that the clock is running on two related project deadlines.
Imperial spokesman Pius Rolheiser told Petroleum News that “as usual, I am not prepared to discuss what may or may not be under consideration (in talks with the federal government) except to say that the dialogue is ongoing.”
NWT remains optimistic
The NWT’s newly appointed Industry Minister David Ramsay said his government remains “optimistic the project will continue moving towards a day when gas is flowing down the Mackenzie Valley pipeline. Hopefully we are looking at this decade when things fall into line.”
He said the NWT never gives up delivering its message that the MGP represents a “huge economic benefit” for the NWT, including aboriginal communities which could own one-third of a pipeline, and Canada.
Ramsay conceded the impact of shale gas on North American gas supplies and prices is important to decisions on the MGP.
That outlook will have to “make sense for the proponents to move forward,” he said. “We believe that with a concerted effort we can keep the optimism alive.”
Ramsay said the NWT government talks to the proponents on a regular basis and is prepared “to support any effort they are making.”
Updated cost estimates coming next
The NEB certificate gives the proponents until Dec. 31, 2013, to provide updated cost estimates for the MGP (which have not been publicly changed from the C$16.2 billion figure released five years ago) and a decision that they intend to proceed with construction.
In addition, the NEB said that, unless it grants an exemption, construction must start by Dec. 31, 2015, for the first gas to start flowing by about 2018.
Rolheiser said that the proponents indicated in their final arguments that the sunset clauses “would be very difficult to achieve and that remains our position.”
He would not comment on whether the partners have any plans to ask for an extension.
Shell tight-lipped
Adding to the list of doubts hanging over the MGP, Shell Canada is tight-lipped about the status of its decision last July to invite bids for its 11.4 percent stake in the project.
At the time, it set an Aug. 31 deadline for a response from a “broad group of prospective purchasers,” but has said nothing since then and declines to comment on whether the sales process has ended or is still being explored.
The other partners are Imperial 34.4 percent, Aboriginal Pipeline Group 33.3 percent, ConocoPhillips 15.7 percent and ExxonMobil Canada 5.2 percent.
Shell’s assets include 100 percent ownership of 1 trillion cubic feet of proven reserves at the Niglintgak field (one of three anchor fields supporting the current MGP proposal) and seven other pools.
Also in the unknown category is whether Korea Gas Corp. or KOGAS is studying the feasibility of exporting Arctic gas as LNG from Tuktoyaktuk in the NWT.
Involved as a minority partner with MGM Energy in a Mackenzie Delta gas find and the world’s largest importer of LNG, KOGAS surfaced more than a year ago with a possible alternative to a Mackenzie Valley pipeline.
Ramsay said he has yet to have any discussions with KOGAS.
“As we move forward and grow our economy, we need to look at all of our options (for Arctic gas), but right now we are focused on getting the Mackenzie project to proceed,” he said.
—Gary Park
