In an April 5 first-quarter interim update ConocoPhillips said the company’s board of directors approved the separation of Phillips 66 from ConocoPhillips — and that ConocoPhillips and its three partners in the C$16.2 billion Mackenzie Gas Project have suspended funding of the pipeline and gathering system due to a continued decline in natural gas prices and the lack of acceptable fiscal terms.
A spokesman for the lead partner in the group, Imperial, confirmed the information, telling Reuters that the Mackenzie Gas Project has closed offices in Norman Wells and Fort Simpson, Northwest Territories, and reduced the size of its office in Inuvik, N.W.T.
Here is what ConocoPhillips’ interim update said about the project: “ConocoPhillips has been involved with three other energy companies, as members of the Mackenzie Gas Project, on the development of the Mackenzie Valley Pipeline and gathering system, which was proposed to transport onshore gas production from the Mackenzie Delta in northern Canada to established markets in North America. The company has a 75 percent interest in the Parsons Lake natural gas field, one of the primary fields in the Mackenzie Delta, which would have anchored the pipeline development. In the first quarter of 2012, the co-venturers elected to suspend funding of the project due to a continued decline in market conditions and the lack of acceptable commercial terms. The company expects to record a noncash impairment for the carrying value of the undeveloped leasehold and capitalized project development costs of approximately $525 million after-tax, during the first quarter of 2012.”
Parsons Lake is one of three anchor fields for the project.
Davy Kong, ConocoPhillips’ upstream communications advisor, told Petroleum News April 5 that the “write-down of these assets does not mean they are no longer an important part of our portfolio or that they can’t be developed in the future.”
The partners in the Mackenzie Gas Project are Imperial 34.4 percent, Aboriginal Pipeline Group 33.3 percent, ConocoPhillips 15.7 percent, Shell 11.4 percent, and ExxonMobil Canada 5.2 percent. Imperial is largely owned by ExxonMobil.
Shell put its share up for sale last year, but has yet to announce a buyer.