Explorers: Mac line should be larger

Canadian Arctic explorers apparently have at least one of the same concerns as Alaska Arctic explorers: will a planned natural gas pipeline be large enough to accommodate discoveries they make, or will they have to get in line behind known reserves?

The Globe and Mail reported July 7 that the Mackenzie Explorer Group told the National Energy Board that there is more gas in the region to be served by a proposed Mackenzie gas pipeline than the line could handle. Members of the group include Devon Energy and Chevron Canada, companies which are exploring but don’t have a stake in the proposed pipeline.

Imperial Oil, ConocoPhillips Canada and Shell Canada, the major sponsors of the proposed Mackenzie pipeline, have reserves of about 6 trillion cubic feet of gas onshore.

John Richels, president of Oklahoma City-based Devon, said the company’s planned $60 million well in the Beaufort Sea is targeting prospects that might contain several trillion cubic feet of gas. Devon told the National Energy Board its worry is the capacity of the gathering system in the Mackenzie Delta.

A report for the explorers by a Calgary engineering firm said capacity of the main pipeline could be an issue. The firm suggested that with discoveries there might be enough gas to support a line moving 2.5 billion cubic feet a day; the proposed line will be 1.2 bcf a day, with possible expansion to 1.8 bcf.

Imperial spokesman Hart Searle told The Globe and Mail that Imperial is trying to strike a balance in the size of the line: “If you size it too big and the gas isn’t there, the cost of service goes way up.”

The study done for the explorers said there could be some 46 tcf of undiscovered gas in the Mackenzie Delta and Beaufort Sea, more than four times higher than an estimate submitted in a study done for Imperial; that study focused on demonstrating that there was enough gas to justify a pipeline.

Explorers such as Anadarko Petroleum, along with U.S. federal and Alaska state agencies, have expressed concerns that initial capacity in a North Slope natural gas pipeline would all be taken up by known gas reserves from Prudhoe Bay and Point Thomson.

—Petroleum News