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MGM backs off Mackenzie Delta
Faced with meeting an early C$6.3 million work-spending commitment to retain its exploration licenses in the Mackenzie Delta region of the Northwest Territories and little evidence that natural gas from the Arctic has any hope of reaching southern Canadian and U.S. markets, MGM Energy has headed for the exit.
The Calgary-based junior explorer was the last company to continue drilling while the majors had shelved their exploration plans as hopes for the Mackenzie Gas Project to initially deliver 800 million to 1.2 billion cubic feet per day to customers started to dwindle.
The Imperial Oil-headed MGP venture went through a drawn-out regulatory process, a delay that saw the project overhauled by the rapid emergence of technology-driven shale gas prospects and a slump in commodity prices.
Four licenses surrendered MGM has surrendered four exploration licenses that were due to expire in January 2016, failing which it was due to make a payment of C$6.3 million in June, and consolidated another license.
John Hogg, MGM vice president of exploration and operations, told the Canadian Broadcasting Corp. that his company “saw little potential for the Mackenzie gas pipeline to be back on stream before those licenses expire” and without a pipeline there was no reason to drill for oil.
“It just doesn’t make sense to not have the infrastructure to get your product out,” he said.
Less troubled was Mayor Merven Gruden of Tuktoyaktuk, NWT, who said he was “not too worried” by MGM’s decision,
He said that exploration being developed for the Beaufort Sea by Imperial Oil, ExxonMobil, BP and ConocoPhillips meant that region would still go forward.
Activity is also intense on the Canol shale region of the Central Mackenzie Valley, giving the NWT some hope of resource development.
—Gary Park
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