Mackenzie Delta producers ask pipeline firms for ideas

Canada’s dominant pipeline companies — Duke Energy, TransCanada PipeLines and Enbridge — all interested in Mackenzie pipeline project

Gary Park

PNA Canadian Correspondent

Canada’s lead natural gas producers on the Mackenzie Delta have stepped up the pace of their C$4 billion project by inviting submissions from pipeline companies.

The Mackenzie Delta Producers Group, led by ExxonMobil subsidiary Imperial Oil Ltd., has given the pipelines until mid-September to answer the request for proposals.

A spokesman for Imperial said Aug. 27 that the producer consortium — Imperial, Conoco Canada Ltd., Shell Canada Ltd. and ExxonMobil Canada — is seeking ideas and concepts that could add value to the case that it being developed for regulatory applications.

He said the guidelines offered to the pipeline companies range from ownership to non-ownership of the delivery system, covering 850 miles from the Delta along the Mackenzie Valley to Alberta. The priority for the producers is to ensure they don’t overlook any value-added aspects within the terms of a memorandum of understanding signed last fall by the producers and the Mackenzie Valley Aboriginal Pipeline Corp.

Duke Energy, TransCanada PipeLines and Enbridge, the three dominant pipelines operating in Canada, are all interested in the request and believe they have constructive ideas to offer. Industry observers believe Houston-based El Paso might also be a contender.

Proposals due by mid-September

The producer group is then expected to take several months to evaluate the suggestions as part of its C$250 million “project definition” phase, which is expected to see applications filed with regulators in mid-2003, with decisions expected in 2005 and 2006 and deliveries starting in the 2008-2010 period.

The producer group, which has reserves of 5.8 trillion cubic feet, is eyeing pipeline space of 800 million to 1 billion cubic feet per day.

The Mackenzie Valley Aboriginal Pipeline’s target participation, to qualify for an equity stake in the pipeline, is 400 million to 500 million cubic feet per day, drawn from other Delta and Mackenzie Valley discoveries.

The producers group has just concluded a non-binding open season for Delta-Beaufort Sea producers in an attempt to determine the number of shippers likely to seek space on the pipeline and the volumes they hoped to produce.

The invitation attracted response from 20 companies (including the four major producers), but Imperial said it needs more time to develop a reliable assessment of the volumes nominated.

The key players outside the producers group include Petro-Canada, Devon Canada Corp., EnCana Corp., Chevron Canada Resources, Anadarko Canada Corp., Burlington Resources Canada Energy Ltd., BP Canada Energy Co. and Devlan Exploration Inc.

Pipeline companies interested

Based on its experience, Enbridge also believes it can make positive contribution to the proposal stage.

TransCanada said it has “much to offer” and Duke said it is eager to be involved in both the Delta and Alaska highway projects.

Since taking over Westcoast Energy last year, Duke has joined TransCanada as joint partner in Foothill Pipe Lines Ltd., which has exclusive rights to build and operate the Canadian portion of an Alaska Highway pipeline and owns 62 percent of Alaskan Northwest Natural Gas Transportation Co., which has similar rights for the Alaska portion.

Canadian analysts believe that outside of the three Canadian pipelines and El Paso, too many U.S. pipelines have been sideswiped by this year’s trading scandals to be viewed as serious contenders for the Delta project, although having a stake in the venture would be invaluable in establishing a presence in the Far North.

Kakfwi: Cracks developing in Mackenzie gasline

Gary Park, PNA Canadian correspondent

In Alberta for meetings with the energy industry, Kakfwi said Aug. 28 that executives of the gas-producing companies are becoming worried that a decision on transferring control of northern resources to northerners has become bogged down.

He said Indian Affairs Minister Robert Nault had promised to name a negotiator to resolve the devolution of powers and revenue-sharing by the end of March.

“This is the end of August, Where is the negotiator?” Kakfwi said.

Progress has been sidetracked by a summer showdown between Prime Minister Jean Chretien and the front-runner to replace him as leader of the governing Liberal Party, former Finance Minister Paul Martin.

Martin recently resigned from the cabinet to pursue his leadership aspirations and Chretien, with his support rapidly waning, announced earlier this month that he would step down no later than February 2004.

Kakfwi said the failure to resolve the resource-control issue is already resulting in crumbling aboriginal support for the Mackenzie Valley pipeline.

He said some smaller Native communities have withdrawn from an agreement that established the terms of an aboriginal equity stake in a pipeline and the holdout Deh Cho First Nation, whose lands