November 29, 2001 --- Vol. 7, No. 150November 2001

Canada's energy ministers expect early pipeline decisions; two pipelines likely

Canada's leading energy ministers emerged from Texas meetings this week with U.S. and Canadian gas producers certain that decisions on Arctic pipelines are imminent and could involve routes from both the North Slope and Mackenzie Delta.

But Terry Koonce, vice-president of Exxon Mobil Corp., cautioned against too much optimism, saying the tax and royalty rates in Alaska must be attractive and the regulatory approval process for a pipeline must be streamlined if development is to go ahead.

However, Canada's Natural Resources Minister Ralph Goodale told reporters Nov. 28 the industry expects to file an application for at least one line within six months.

“It's timely now to proceed with those projects,” he said. “The companies are doing their homework.”

Based on talks with company executives, Goodale said the North Slope and Delta producers indicated they will finish their internal analyses and make their decisions early in 2002. He said the discussions even extended to the prospect of two pipelines, which is “very much within the realm of possibility.”

Alberta Energy Minister Murray Smith agreed the Alaska and Mackenzie Delta producer groups are “ramping up to decision time. I don't think there is anybody in Canada or the United States who wants to see the opportunity go by. It is time.”

Koonce said the Alaska producers' study is focused on reducing the huge front-end costs.

“Current analysis does not show either of the routes is economic at the present time,” he told reporters in Dallas. “If we had fiscal certainty in Alaska and if we had a regulatory superhighway through the U.S. through legislation, all those factors would help. But no one of them guarantees that this one will be economic.”

A spokesman for Imperial Oil Ltd., which is 69.6 percent owned by ExxonMobil and is the lead partner in the Delta consortium, said that “before year-end 2001 (the Delta producers) hope to be in a position to begin work on regulatory applications.

“We've not made that decision yet ... but we're certainly encouraged by the progress that we've been making. Our hope is that before year-end we can announce that we're going to advance to the next stage, which would be the regulatory and project definition phase.”

Point Thompson will probably proceed without gas pipeline

Greg Mattson, BP director of new development said at this morning’s Alliance meeting in Anchorage that the Point Thompson development picture appears bright because the company has seen significant condensate yield and gas cycling has been quite robust.

“Development will probably proceed without finalizing approval on the gas pipeline project,” he said.

Third producing well completed at Northstar

A third producing well was completed at the Northstar oil field this week, Greg Mattson, BP director of new development told Alliance members in Anchorage this morning.

The well was the first in Alaska to use fiber optic sensors to continuously monitor temperature and pressure along the drill string, Mattson said. BP has tested the technology on wells in Norway and Columbia over the last nine months. The fiber is a product of Cidra Corp. of Houston, which signed a deal in August to provide fiber optic sensors to BP worldwide, Cidra said in a statement.

The current rate of production at Northstar is 25,000 barrels a day, Mattson said.

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