July 27, 2001 --- Vol. 7, No. 90July 2001

Enbridge CEO gives edge to Alaska gas in race to market

Enbridge, one of Canada's Big Three oil and gas pipelines, believes the North Slope will beat the Mackenzie Delta in getting gas to market, said company president and chief executive officer Patrick Daniel.

The Calgary-based company is working with both Alaska and Delta producers' groups and has submitted proposals to both on northern pipeline development. Daniel said during a webcast July 26 that the recent slump in gas prices has forced northern producers to reassess their timing, but he is confident gas will move within seven years "most likely from Alaska, followed by Mackenzie Delta gas."

Until now Enbridge has avoided "getting involved in the controversy over routing, in part at the request of the producers," Daniel said. But he said the company, which competes with TransCanada PipeLines and Westcoast Energy, the joint partners in Foothills Pipe Lines, has made a case to the producers that it fully expects to be a participant in any Arctic pipeline.

Enbridge brings to the table its experience as the only Canadian pipeline operating in Canada's Arctic regions, with its long-time Norman Wells crude line in the central Mackenzie Valley and an Inuvik gas distribution system. Daniel said the producer groups are "very actively looking at where they're going to market the gas and at what price and how they're going to secure those markets." He expects the Alaska group will file a routing application in the first or second quarter of 2002, but gave no indication if or when the Delta producers might make their move.

State, feds approve expansion of Northstar unit

The Alaska Department of Natural Resources Division of Oil and Gas and the U.S. Department of the Interior Minerals Management Service have approved an April request by BP Exploration (Alaska) Inc. to expand the Northstar unit to include an additional federal lease. The agencies have not yet agreed to a participating area for initial Northstar production required before production can begin. The state's decision was issued July 13. The MMS decision was issued July 24.

Jeff Walker, regional supervisor of field operations for the MMS, said in the agency's decision that while MMS approves the addition of federal lease OCS-Y 1645 to the unit, it wants to see some changes in other documentation before approving a participating area.

Division of Oil and Gas Director Mark Myers said in his July 13 decision that BP's proposed fourth plan of development calls for continued development drilling and completion of processing facilities. BP plans to drill and complete a total of up to 16 production wells and five gas injection wells with sustained commercial production by Nov. 1, and possibly as early as Sept. 15, Myers said.

The state decision said BP presented geological and geophysical data indicating that the Northstar Ivishak reservoir extends onto additional acreage to the northwest. BP proposed allocating 0.09 percent of the oil in place for the reservoir to the expansion area, some 2.3 million barrels. Production of the additional reserves will be from Seal Island and require no additional wells or surface facilities.

The expansion adds 2,930 acres to the unit, bringing the total unit area to approximately 33,768 acres.

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