Consortium to begin Mackenzie Delta engineering

CALGARY�A consortium studying development of Arctic natural gas in Canada�s Mackenzie Delta says it has made significant progress in a joint evaluation and will begin preliminary engineering on a proposed pipeline.

Imperial Oil Ltd., Mobil Oil Canada Ltd., Gulf Canada Resources Ltd., and Shell Canada Ltd. said they are ready to begin conceptual engineering and the gathering of baseline biophysical data for a pipeline project to southern markets. The group said it could begin preparing a regulatory application for a pipeline as early as next year.

The companies, which hold about 6 tcf of proven gas reserves in the region, began the study in February. The group said it has held discussions with more than 70 parties representing a variety of interests in the region, and there is strong support for pipeline development.

Plans to develop gas in the 1970s were quashed by poor economics and political and environmental opposition.

Cost of a pipeline through the Mackenzie Valley to mainline connections in northern Alberta is estimated at up to $6 billion (Can.). A line could have more than 1 bcfd of capacity.

BP, ExxonMobil Corp., and Phillips Petroleum Co. said last week they will study a pipeline to move 35 tcf of gas from Prudhoe Bay on the Alaskan North Slope.

A spokesman for Imperial Oil said the Alaskan group has been in touch with the Canadian group. Hart Searle said the focus of the Canadian study is to ensure that Canadian gas can flow profitably to market on its own. He said the study is on the feasibility of developing onshore Mackenzie Delta gas only. He said the group is hopeful but has not yet made any decision to proceed with a project.

Exploration activity in the Mackenzie Delta is expanding, spurred by high demand for gas and prospects of a pipeline.

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