Mackenzie Delta gas pipeline project advances to definition phase

By the OGJ Online Staff

HOUSTON, Jan. 8, 2002 — The Mackenzie Delta Producers Group and the Mackenzie Valley Aboriginal Pipeline Corp. (MVAPC) have begun the project definition phase for the proposed Mackenzie Delta pipeline.

The Imperial Oil Ltd.-led producers group and the pipeline corporation, which represents the Northwest Territories Aboriginal interest in the project, will begin preparing regulatory applications. In October, they agreed to a framework to develop the proposed $3 billion (Can.), 800-mile Mackenzie Valley gas pipeline (OGJ Online, Oct. 15, 2001).

The pipeline would move Mackenzie Delta gas to existing northwestern Alberta lines, which also carry gas exports to the US. An offshore pipeline has been suggested to connect Prudhoe Bay field in northern Alaska to a Mackenzie Delta trunk line, but state officials favor an all-land route to Alberta. In any case, the memorandum of understanding specifically does not apply to a transportation system that includes Alaskan gas, said Imperial.

The Mackenzie Delta joint venture said, “This phase includes technical, environmental, consultation, and commercial work required to prepare, file, and support regulatory applications for field, gas-gathering and pipeline facilities. Work will also begin to develop benefit plans, access agreements and other arrangements in support of the applications.”

The project definition phase will cost $200-250 million (Can.). It will include an environmental impact assessment study. The regulatory application would be filed in 2003.

The other members of the producers’ group are Conoco Canada Ltd., Shell Canada Ltd., and ExxonMobil Canada Ltd. Imperial will be the operator of all jointly owned facilities.

The proposed line initially would be supplied by 800 MMcfd-1 bcfd of gas from Imperial’s 3 tcf Taglu field, Conoco Canada and ExxonMobil Canada’s 1.8 tcf Parsons Lake field, and Shell Canada’s 1 tcf Niglintgak field. Other gas discoveries in the Mackenzie Delta and Mackenzie Valley regions could be connected.

K.C. Williams, Imperial senior vice-president, said, “The historic memorandum of understanding signed in October has the support of Aboriginal leaders who represent about three-quarters of the Aboriginal people of the Northwest Territories…. While we are optimistic, the ultimate decision to build the pipeline can only be made after obtaining regulatory approval, and will be a function of many factors, including natural gas markets, construction costs, and regulatory and fiscal certainty.”

The MVAPC was formed in 2001 to represent the interests of aboriginal people in the proposed pipeline. It wants a one-third ownership interest, which would be incremental to the producers’ initial capacity.

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