|
TC reaching for control TransCanada puts itself in forefront of deal to assume lead role in Mac gas line Gary Park For Petroleum News
TransCanada has declared it is ready, willing and able to take over as builder, part-owner and operator of a Mackenzie Valley gas pipeline, if ever regulatory approval is granted.
To that extent, speculation earlier in December in Canada’s Financial Post that TransCanada might be on the verge of teaming up with the Aboriginal Pipeline Group, came as little surprise.
To some it is seen as just another sign of the pipeline company’s desire to be the dominant shipper of gas from the Mackenzie Delta and the North Slope.
After all, since late October, TransCanada Chief Executive Officer Hal Kvisle has increasingly made it plain his company has plenty of expertise building and running cold-weather pipelines and has a “good working relationship” with the Mackenzie Gas Project producers and the APG.
Pressed at that time to say whether TransCanada would take over control of the main pipeline along the Mackenzie Valley if the economics of construction and operation did not work for the anchor gas owners, he said every alternative was being examined to make the shipping tolls attractive to producers.
What did startle some observers was the Financial Post’s disclosure, attributed to unnamed sources, that a deal to put TransCanada at the helm could be announced before Christmas.
But Kvisle has since given weight to that prospect by telling the Globe and Mail Dec. 13 he expects ongoing talks between his company and the MGP consortium will soon result in a new ownership structure for the pipeline.
MGP lead partner Imperial Oil and the Canadian government won’t comment, but Kvisle, in a Globe and Mail interview, said TransCanada has been “very involved in developing a couple of ways that the project can move forward” and intends to discuss those options with the federal government.
He put a Mackenzie Valley pipeline in the same category as the building of the Canadian Pacific railway in the 19th century and TransCanada’s own west-to-east natural gas pipeline in the 1950s in suggesting that a pipeline from the Arctic would merit “very significant involvement” by the federal government.
Kvisle said that, while the Mackenzie gas producers could retain an ownership stake in any TransCanada-run pipeline, their primary function would be to finance development of the gas fields and make long-term shipping commitments.
However, he would not discuss what financial or tax incentives TransCanada would require from Ottawa, although he said the partners would need assurances from Industry Minister Jim Prentice — the federal cabinet minister assigned to the MGP file — that there would be no delays in the regulatory process and outstanding land claims in the Northwest Territories would be resolved.
Other than suggesting last summer that the MGP would have to be “reinvented,” Prentice has kept a low profile recently, but has reportedly been holding discussions with the MGP partners.
Those who have been, or are involved in MGP negotiations, tip-toed around prospects of an early overhaul of the MGP structure that could result in TransCanada taking a 60 percent stake in the C$7 billion pipeline and the APG the balance.
One source told Petroleum News that the Canadian government has not even received a “formal pitch” from TransCanada.
And, because of the government’s unhappiness over earlier leaks that federal incentives might be in the offing, he said “everyone has gone to ground.”
Others suggested Imperial would have no reason to participate in such a major change in ownership before the National Energy Board rules on the application about mid-2009.
With an approval in hand, Imperial would be able to command a better price, including full recovery of project costs, which have now exceeded C$600 million.
From the outset, Imperial has been charged with carrying the MGP through the regulatory process and it has no reason to bail out of that commitment, another source said.
TransCanada advantages: ROR, skill set The advantage TransCanada enjoys, as a regulated pipeline company, is its ability to accept a lower rate of return from the pipeline than the gas producers would expect.
It also brings to the table almost unmatched expertise in the pipeline field, whereas Imperial, ConocoPhillips Canada, Royal Dutch Shell and ExxonMobil Canada — owners of the MGP’s three anchor gas fields — have a different skill set.
The consensus among sources contacted by Petroleum News is that Imperial is not yet at the point of handing the lead pipeline role to TransCanada.
MGM gets discovery license Meanwhile, MGM Energy, the startup Arctic explorer, raised hopes in another corner when it announced Dec. 10 that Indian and Northern Affairs Canada had awarded a significant discovery license for the Umiak field, located on the Mackenzie Delta, northwest of Inuvik, Northwest Territories.
MGM said the Umiak field — which covers 21,270 acres and has two reported discovery wells — has a contingent resource of 444 billion cubic feet, enough to produce 100 million cubic feet per day for more than 10 years.
MGM said it is now weighing development options for the field to ensure it is able to deliver gas when the proposed Mackenzie pipelines starts service.
The company has already signed a precedent-setting agreement to feed 200 million cubic feet per day into the Mackenzie gas-gathering system, staking its claim to a share of the 1.1 billion cubic foot per day network.
The significant discovery license means MGM has indefinite tenure of the Umiak field, free from regulatory drilling obligations. But, regardless of that designation, MGM plans three more wildcats this winter, following two dry holes in the last northern drilling season. That’s part of its original farm-in agreement to complete 11 holes over a four-year period, although it can stop at five and earn a reduced working interest.
| 