AEC Gains Anchor in Northwest Territories
Calgary-based AEC Oil & Gas secured an anchor land position
in the gas exploration fairway of the Mackenzie Delta in the
Northwest Territories. The lands, which were acquired through a
property swap with Husky Oil, give the partnership of AEC West Ltd.
and Alberta Energy Company Ltd. rights to more than 400,000 net
"While a new area for AEC, this land complements AEC's earlier
initiatives into the Northwest Territories. It gives us tremendous
exploration upside that ensures AEC has a significant presence in
Canada's new natural gas frontier," said Randy Eresman, AEC Oil
& Gas president.
The AEC lands are within the area where the Inuvialuit Regional
Corp. recently announced plans to offer development concessions on
more than one million acres in six blocks near Inuvik and
Tuktoyaktuk where the Mackenzie River enters the Beaufort Sea.
"The timing for taking this land position is excellent, at the
forefront of renewed interest in the Mackenzie Delta. Our new
position is in an area where land claims have been settled and it
enables us to pursue our interests in concert with Northern
residents who have signaled a desire to join with energy producers
in responsibly developing the resources of the North. There is also
growing consensus on pipeline infrastructure, and we know the
markets exist for these northern resources, all of which is
integral to that development objective."
The increased ability to move western Canadian gas to U.S.
markets is what makes the Mackenzie Delta an attractive play,
Eresman said. "We believe that there is a fundamental change in gas
pricing in North America, but also there is an excess of pipe
leading out of western Canada. So that creates the opportunity to
bring gas into western Canada from the Northwest Territories, and
that opportunity really hasn't existed before."
Eresman cited figures that say between 5 and 10 Tcf of gas has
been found in the Mackenzie Delta. He said the company believes
that generally a gas price of $3/Mcf or more at Chicago is
necessary to make development work. Timing to bring the gas south
falls in the five- to 10-year range, he said. "We believe that the
fundamentals for gas in North America, especially in western
Canada, are great into the future. We see growth in markets
exceeding supply, and there is evidence of that in most of the
major basins around North America.
"What makes this really exciting for us is this is one of the
highest reward areas that we've entered into in North America in a
long time. Pool sizes here are measured in Tcf. We believe this to
be a great opportunity to build the future of our company with
reserve growth in that five- to 10-year period. This is a rare
opportunity in North America."
Eresman said the new land position in the northern portion of
the Territories complements AEC's current oil exploration program
in the central Territories where the partnership has acquired
rights to more than 400,000 net acres in two exploration licenses
in the Sahtu region close to Norman Wells. AEC has two rigs
drilling in this region and plans up to five wells this year. AEC
owns 60% and Renaissance owns the remaining 40% interest.
Joe Fisher, Houston
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