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Imperial keeping Arctic gas hope alive Files with Canada’s NEB to extend Mackenzie Gas Project sunset clause by 7 years; requirement now for construction to start in 2015 GARY PARK For Petroleum News
Imperial Oil, as lead partner in the Mackenzie Gas Project, has taken a formal step to keep the venture alive for at least another seven years in hopes that there will be a market for Canada’s Arctic gas, including for export as LNG.
The company has applied to Canada’s National Energy Board to extend a sunset clause attached to regulatory approval of the MGP that was granted in 2011.
That condition requires Imperial and its partners - ExxonMobil, Shell Canada and ConocoPhillips Canada - to start construction by the end of 2015.
But with gas prices about half what they were when the initial regulatory application was filed in 2004, the project is no longer commercially viable.
In a letter to the NEB, Imperial Senior Vice President Bart Cahir said that an extension would allow a four-year construction phase to start in 2022, with gas coming on stream in 2026.
The company said it now needs three years to reassess potential changes to the gas market.
Imperial said the extension to the sunset clause would help Imperial avoid “the cost and time required to begin again” which it said would be a “significant deterrent” to developing the Delta resources, which include 6.2 trillion cubic feet of established reserves held by the four partners.
The MGP partners “continue to believe that, despite current natural gas market-driven delays, the approved basin-opening project remains in the interest of northerners and Canadians,” Imperial wrote.
No material changes Other than the timing change, Cahir said Imperial does not “envision any material changes” to the proposed operation, which would carry gas from the Mackenzie Delta over about 720 miles to connect with major pipelines in Alberta.
There has also been talk of the gas being used as feedstock for a joint LNG project by Imperial and its parent company ExxonMobil.
Northwest Territories Premier Bob McLeod said in a supporting letter said that “in light of the significant investments already made in order to acquire (the NEB approval) I also believe that the proponents have much to gain and nothing to lose by continuing to hold” the approval.
Nellie Cournoyea, chief executive officer of the Inuvialuit Regional Corp. and a former NWT premier, also endorsed the extension in hopes of resulting in Canada’s and possibly the world’s first venture “where aboriginal people have significant ownership and meaningful participation.”
An Aboriginal Pipeline Group, representing Native communities in the NWT, has secured rights to own one-third of the pipeline provided it is able to able to negotiate matching gas volumes.
Imperial did not offer any revised cost estimates for the MGP, which has been projected to reach C$20 billion, or say how much the partnership has spent so far.
Bringing the MGP to the start of construction would still require thousands of permits.
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