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Trying Imperial’s patience CEO troubled by possible delay in Mackenzie gas line hearings Gary Park Petroleum News Calgary Correspondent
Imperial Oil’s patience is starting to wear thin as a slow-moving bureaucracy threatens to stretch the regulatory handling of the Mackenzie Valley gas pipeline by six months.
In a blunt criticism of the environmental process, Imperial Chief Executive Officer Tim Hearn said he is “concerned right now about the pace of things,” warning that delays in the pipeline phase could spill over to other aspects of the C$5 billion project.
He told reporters in Toronto Feb. 19 that the Mackenzie Valley Environmental Impact Review Board says it “wants to have hearings to decide if they want to have hearings and the federal environmental minister and all the producers have said, ‘We agree, we need hearings.’
“I’m not sure why we need hearings to determine why we’re having hearings, which will add ostensibly another six months to the process.”
The Mackenzie Gas Project proponents expect to submit regulatory applications this year to set in motion a coordinated regulatory review by 37 agencies in 2004 and 2005.
Delays beyond that period would stall the start of the construction phase, scheduled to last three to four years, and the prospects for deliveries to start late this decade rather than the most optimistic target of 2008. Pipeline needed before gas reserves development Until the pipeline is built, development of gas reserves in the Northwest Territories is an economic risk that few companies are prepared to take on.
Hearn insisted that speeding up approvals will not compromise environmental concerns.
“We can get the job done right from everybody’s point of view.
“But we can do it more efficiently and I challenge all of us to push for those kinds of solutions,” he said.
The growing worry for Imperial is that a delayed Mackenzie pipeline could clash with multi-billion dollar pipelines by Enbridge and Terasen from the Alberta oil sands, setting up fierce competition for labor and materials. Deh Cho still a threat Outside of the existing regulatory structure, the Deh Cho First Nations continue to pose a threat.
They are still waiting for a response from the Canadian government to their proposal that the current process be dismantled and replaced by what they claim would be streamlined environmental and regulatory hearings. Without a positive response, the Deh Cho, whose lands cover the lower 40 percent of the pipeline route, have threatened to take their case to the Federal Court of Appeal, claiming that they have not been properly consulted.
A legal spokesman for the Deh Cho said the first nations want an assurance within a month that their arguments are being treated seriously.
In a Feb. 17 presentation, George Bezaire, Imperial’s director of corporate planning and communications, said the Mackenzie partnership with ExxonMobil Canada, ConocoPhillips and Shell Canada, plus the Aboriginal Pipeline Group, has already held more than 500 meetings with parties involved in the scheme to ship Arctic gas to southern markets. Imperial looking at two buried pipelines He said Imperial is aiming for two buried pipelines down the Mackenzie Valley — a gas line that would connect with existing infrastructure in northern Alberta and a natural gas liquids pipeline from the Mackenzie Delta to Norman Wells.
As well, he said Imperial and sister company ExxonMobil are moving ahead with possible joint development of their oil sands leases in northeastern Alberta.
Bezaire and Hearn both indicated that results from winter drilling of 200 core wells has been encouraging in delineating the resource potential of Imperial’s Kearl Lake lease.
“We expect that this is a very large, high quality resource that will be capable of supporting a project of 200,000 barrels per day or even larger,” Bezaire said.
A regulatory filing is expected by 2005, with production starting at 100,000 bpd.
Imperial’s Cold Lake heavy oil scheme produced 129,000 bpd in 2003 and further expansions could raise that to 180,000 bpd by adding 350 million barrels of proved reserves. The development drilling program for this year includes more than 300 wells.
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