|
Explorers want answers Mackenzie Delta-Beaufort Sea drilling plans hang on gas pipeline access Gary Park Petroleum News Calgary Correspondent
E&P decision-makers in Canada think the best potential for new natural gas finds lies north of the 60th parallel.
Without exception, companies active in the Mackenzie Delta-Beaufort Sea are “encouraged” by the June 18 commercial agreement that fuels hopes of a Mackenzie Valley pipeline by 2010.
But this confidence in Canada’s North, with 46 percent of 42 chief executive officers surveyed by Deloitte & Touche saying the region is the likeliest source of significant finds, does not automatically translate into plans for a storm of new exploration on the Delta over the short-term.
A consensus view among companies contacted by Petroleum News is that the pipeline financing and participation deal, however important, is just another step on a long and winding road.
“It has renewed motivation (in the delta),” said Nadine Barber, a spokeswoman with Anadarko Canada, while cautioning that there are many questions on pipeline access, tariffs and tolls to be resolved before exploration plans can be advanced.
Michel Scott, Devon Canada’s vice president, frontiers, said the pact involving the Mackenzie Delta Producers Group, the Aboriginal Pipeline Group and pipeline company TransCanada, is “in general, a very positive step in the right direction ... the stars seem to be aligning for this project.”
But he, too, said that exploration plans now depend heavily on establishing rules of access to the pipeline. Key: who can derail project? Murray Roth, vice president, finance, with Akita Drilling — the dominant drilling contractor in the North — doubted that the 2003-04 winter would be “significantly different from what was planned,” although there are signs larger companies in the Delta region are “continuing to get more involved.”
For Roth, the major hurdles now involve “determining exactly what the regulatory process is and finding out who will have the power to derail the project.”
One of the key unknowns is what stance environmentalists will take — whether they will try to block deliveries of gas from the Delta, or allow development to proceed in “an environmentally respectful manner,” he said.
In addition, he said aboriginal groups in the Northwest Territories are “always challenging,” especially given the transitory nature of the region’s Native leaders.
Scott is a strong believer that a Mackenzie Valley pipeline is “a lot more doable” than an Alaska Highway system, given that initial volumes of about 1 billion cubic feet per day can be absorbed in Canada’s export pipeline network without the need for expansions, in contrast to the challenge of delivering 4 bcf to 5 bcf per day from the North Slope to Lower 48 markets.
However, Roth cautioned that if the Alaska project “caught momentum,” given the sudden attention gas is receiving from the Bush administration, it could quickly stymie the Mackenzie project.
Of the next winter drilling season, Roth said Akita — which has two rigs on the Delta and another four in the Northwest Territories — is not expecting a surge of new exploration, but is in talks with the Delta producers’ group (Imperial Oil, ConocoPhillips Canada, Shell Canada and ExxonMobil Canada) about their development drilling plans. Development wells needed Hart Searle, a spokesman for Imperial, said the group will need to embark on development wells to bring their anchor fields up to full production, including 10 to 15 wells each for Imperial’s Taglu field which has 3 trillion cubic feet of reserves and ConocoPhillips’ Parsons Lake discovery of 1.8 tcf, plus six to 10 wells for Niglintgak, which has 1 tcf and is owned by Shell and ExxonMobil.
The Mackenzie Delta Explorers Group, comprising Anadarko Canada, BP Canada Energy, Burlington Resources, Chevron Canada Resources, Devon Canada, EnCana and Petro-Canada, has committed to spend C$900 million on five-year exploration licenses, some of which start to expire by fall 2004.
Building reserves among those companies is essential if the Aboriginal Pipeline Group is to negotiate about 400 million cubic feet per day of supplies needed to secure its one-third equity stake in the pipeline.
Scott said Devon — which shares a possible 300 bcf find with Petro-Canada — has protected its licenses by drilling six wells and is still planning its upcoming winter activities. One exploration well likely Regardless of the pipeline agreement, Anadarko is likely to drill one exploration well this winter in partnership with operator EnCana and ConocoPhillips after two winters of gathering seismic data, Barber said. A final decision will be made this summer.
Without confirming any winter plans, EnCana spokesman Alan Boras said the big Canadian independent does have a long-term commitment to explore the Delta.
A spokeswoman said Chevron Canada, in partnership with BP Canada and Burlington, will make an early decision on whether to drill a second well this winter after logging the North Langley K-30 discovery earlier this year that tested at a restricted 18 million cubic feet per day.
Meanwhile, the producer group, having filed a preliminary information package with the 14 regulatory agencies involved in the Mackenzie Gas Project, is now turning its attention to preparing the final applications which are likely to be submitted in 2004. That phase involves three separate applications: development of the Delta’s three anchor fields; plans for a gas-gathering pipeline; and the Mackenzie Valley pipeline. Hearings will probably take 24 to 30 months.
Searle also said the producers will probably seek firm shipping commitments by mid-2004, following through on a non-binding open season that attracted 20 responses last summer, as it works on designing an expected 30-inch pipeline.
| 