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Conoco boss fights for development of Mackenzie Delta gas Dunham gives top priority to newly acquired Arctic properties; plans to use high-level Washington “friends” to accelerate pipeline schedule Gary Park PNA Canadian Correspondent
Conoco Chairman and Chief Executive Officer Archie Dunham counts George W. Bush and Dick Cheney among his friends and figures that will help his company speed up development of its newly acquired natural gas properties in the Mackenzie Delta. (Conoco pulled out of Alaska in 1993 after filing suit against the trans-Alaska pipeline owners for their tariff policies. Dunham was number two man at Conoco at that time.)
Prior to a pep talk for the 1,200 former Gulf Canada Resources’ employees, who are now in the Conoco fold following a C$9.8 billion takeover, Dunham declared the Delta is “very, very important to us — priority No. 1 for (Conoco Canada).”
He set an ambitious target of slashing “at least two years” from the current timetable of five to eight years for delivering Delta gas to market. “I think if we could do it in four to six years, that would be good.” Wants no aboriginal ownership Mindful of the widely held view that the North Slope consortium of BP, ExxonMobil and Phillips Petroleum is seen as better positioned than the Delta producers (Imperial Oil, Shell Canada, ExxonMobil Canada and Conoco Canada) to get its project up and running first, Dunham delivered a tough line on two issues.
• He will use his high-level connections to push for the inclusion of Delta gas in any pipeline out of the Arctic.
• Canada’s aboriginal communities can forget about 100 percent ownership of a pipeline.
Claims ties with Knowles, Canadian leaders
In addition to being a key fundraiser for Bush and a long-time friend of Cheney, Dunham claims strong ties with Canada’s federal and provincial leaders and with Alaska Gov. Tony Knowles, a fellow native Oklahoman.
“We are going to use all those relationships to try and accelerate the pipeline schedule,” he said. “I think there is going to be room for compromise. It’s going to be a political issue. It will be settled politically and the producers are going to be very supportive,” he said.
“We’re going to be able to put together a project that will be good for Alaska, good for the United States, good for Canada, good for Alberta, good for aboriginal people and good for environmentalists.” Mackenzie gas must go first Henry Sykes, the newly appointed president of Conoco Canada, urged the Canadian government to more actively promote the Mackenzie Valley route.
“I think at some point the federal government will have to come on board and say that Canada is best served by a pipeline from the Mackenzie Delta,” he said.
Dunham said he can’t “imagine a politician in Canada agreeing to a pipeline route that did not include Mackenzie Delta gas — Canadian gas production,” indicating he is not fazed by vehement opposition from Alaska and the Yukon to any pipeline under the Beaufort Sea.
“With a portfolio this important to all kinds of economic issues in Canada, it’s only logical that whatever route is chosen, it has to include Mackenzie Delta gas,” he said.
While stopping short of giving unqualified backing for an “over-the-top” route, Dunham said he has had recent talks with Knowles.
“I don’t think any route is dead,” he said. “I think we’re in the talking stage; we’re in the negotiating stage. Long term, we need multiple pipelines to the south.”
He said his Houston-based company wants to become “significantly more involved” in discussions and negotiations on the feasibility of developing Delta gas.
“Our sole interest right now is going to be Canada and the Mackenzie Delta, so we have no potential conflict of interest around choosing this route versus another route,” he said. “We are going to have a greater sense of urgency (to develop) the Delta perhaps than some of the other producer.”
Exxon against faster schedule for Delta While ExxonMobil and Imperial Oil, its 69.6 percent-owned Canadian subsidiary, have rejected talk that they are at odds over the timing of North Slope and Delta development, many analysts insist that conflict is unavoidable, with some suggesting the Delta is bound to trail Alaska in coming on stream.
An Imperial spokesman dismissed talk of conflict with the parent company, saying Imperial operates independently.
“Certainly we review our plans, including the Mackenzie Delta plans, with our major shareholder, but they have always been supportive of our plans and activities regarding the Mackenzie Delta feasibility study,” he said.
The spokesman welcomed Dunham’s “energy and enthusiasm,” but cautioned it would be a daunting task to accelerate the schedule for Delta development given that the “political and socio-economic challenges are just as complicated as the technical side.”
He said a project of such scale “has never been done before and I think we need to recognize you need to move forward at a measured pace. I think we’re moving as quickly and aggressively as we need to.” Conoco wants ownership in line Others have argued that there would not be sufficient financing, construction workers or materials to develop both basins simultaneously, with separate pipelines along the Alaska Highway and the Mackenzie Valley. That, in turn, has raised fears that Delta gas could be stranded indefinitely.
Compounding the Delta worries is dissension among aboriginal organizations over how much Native ownership of a pipeline is feasible and desirable.
On that issue, Dunham was emphatic that 100 percent aboriginal ownership, as proposed by Houston-based Arctic Resources, is out of the question.
“We’re going to have ownership of the pipeline,” he said, recalling that Conoco, about a decade ago, doubted it could get full value for its Alaska resources because it didn’t hold an equity position in the trans-Alaska pipeline system.
“The owners of the pipeline, by adjusting the tariffs on the pipeline, could really diminish the value of the producing properties and that’s not going to happen again,” he said.
However, aboriginal leaders in the Northwest Territories have been emphatic that no pipeline right of way will be approved through their lands without a aboriginal equity stake in the pipeline — whether that is 100 percent or 33 percent.
A spokesman for the Sahtu First Nation, which wants full Native ownership, reacted calmly to Dunham’s hard line, suggesting “it’s only a bargaining position.”
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