Imperial, ExxonMobil land Canadian Beaufort Sea rights

Affiliated companies Imperial Oil and ExxonMobil Canada have made a strong statement of belief in Canada’s Arctic by jointly bidding C$585 million for an exploration license in the Beaufort Sea.

Two of the four corporate partners in the Mackenzie Gas Project have obtained rights to a parcel covering almost 508,000 acres about 160 miles north of Inuvik, Northwest Territories.

They are each required to make qualifying expenditures of 25 percent, or C$73.1 million, within five years to gain a four-year extension of the license.

Imperial Senior Vice President Randy Broiles, the company’s point-man for the MGP, described the acreage as a “major addition” to Imperial’s undeveloped property in the Mackenzie Delta/Beaufort region.

While cautioning that the Arctic is a “high potential, technology intensive frontier area,” he said the acquisition represents a “potential opportunity to add to our resource base in the Beaufort Sea and is consistent with our continued interest in energy development for Canada.”

Imperial is the 34.4 percent operator of the MGP and ExxonMobil has a 5.4 percent stake.

Other successful bids at the auction held by Indian and Northern Affairs Canada saw ConocoPhillips Canada lock up rights to 256,270 acres for C$12.08 million, while Chevron Canada made a successful bid of $1 million for 267,325 acres. The two parcels are about 85 miles and 120 miles north of Inuvik, respectively.

ConocoPhillips is a 15.7 percent partner in the MGP and Chevron Canada, although outside the MGP owners’ group, has been one of the active Mackenzie Delta explorers over recent years.

The move into the Beaufort by Imperial and ExxonMobil gives impetus to a region regarded as a key to Canada’s long-term energy security, although construction of the MGP is seen as vital to opening up the basin.

A natural gas pipeline from the Mackenzie Delta would establish a right of way along the Mackenzie Valley for eventual shipments of oil and gas from the Delta and the Beaufort.

The Geological Survey of Canada has estimated recoverable resources from the Mackenzie/Beaufort at 67 trillion cubic feet of gas and 7 billion barrels of oil.

But Devon Canada has drilled the only wildcat in the Beaufort since 1989 when it completed the first of four possible wells last year.

Further drilling has been put on hold pending approval of the MGP and an agreement to provide access to the Mackenzie gas gathering system for independent explorers.

Editor’s note: ExxonMobil owns approximately 69 percent of Imperial.

—Gary Park