April 17, 2003 --- Vol. 9, No. 41April 2003

Mackenzie Valley breakthrough

The Deh Cho First Nations of the Northwest Territories, the major aboriginal holdouts in the Mackenzie Valley gas pipeline project, have signed an interim land deal that could open their region to oil and gas exploration and possibly speed up pipeline negotiations.

The April 18 interim resource management agreement with the federal Department of Indian Affairs and Northern Development will “pave the way for orderly development” of the southern Mackenzie Valley, said Deh Cho Grand Chief Mike Nadli. He said he was “flabbergasted” that the terms had been reached as quickly as they had for a deal that is “unprecedented in its scope.”

Nadli, who speaks for 10 chiefs and 4,000 residents, said the pact covers about 80,000 square miles, of which slightly over half will be open to oil, gas and mining development, subject to terms and conditions set out by the Deh Cho. Until now the Deh Cho have declined to be part of an October 2001 memorandum of understanding between the Mackenzie Delta Producers Group and aboriginal communities along the proposed pipeline right of way that set out the terms of a one-third aboriginal stake in the project.

A spokeswoman for Indian Affairs and Northern Development said there is now hope that discussions can proceed on a pipeline that offers benefits to all stakeholders.

Hart Searle, a spokesman for the Delta producers, told Petroleum News that the resource agreement could help “kick-start” negotiations with the Deh Cho. He said the producers’ consortium has always been “ready, willing and anxious to discuss benefits, plans and access” matters with the Deh Cho and an agreement that clarifies which land is available for resource development should help to “move the process forward.”

The agreement also clears the way for land postings within a year for a region that Canada’s National Energy Board estimates has undiscovered marketable resources of 10.2 trillion cubic feet. Production in the Liard Plateau has totaled more than 90 billion cubic feet in almost three years, but exploration ventures involving companies such as Purcell Energy, Talisman Energy and Chevron Canada Resources have been stalled by the absence of a land agreement.

BP applies to expand Milne Point

BP Exploration (Alaska) applied April 7 to expand the Milne Point unit and the Schrader Bluff participating area on Alaska's North Slope. BP is operator and 100 percent working interest owner at Milne Point.

The Alaska Department of Natural Resources, Division of Oil and Gas, said the proposed expansion area is on the southeast border of the Milne Point unit and northwest of the Prudhoe Bay unit would include some 1,280 acres.

BP told the state this is acreage where the Schrader Bluff formation is believed "to be commercially viable at this time" and said it estimates that gross proven Schrader Bluff reserves within the expansion area are 10.9 million barrels of oil "subject to oil-water contacts."

The expansion request is based on the development plans of the Schrader Bluff horizon at BP's newly constructed Milne Point S pad. Fourteen production wells and 20 injection wells with facilities infrastructure are under development at S pad. Plans this year call for drilling beyond current Milne Point unit and Schrader Bluff participating area boundaries "in order to fully develop the reserve potential," the company said.

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