A property swap announced yesterday by Anadarko Petroleum andAEC Oil and Gas illustrates the increased activity in the far Northand the likelihood that the North Slope in Alaska and the MackenzieDelta in the Northwest Territories of Canada are equally importantfuture supply sources for the U.S. marketplace.

After gaining a strong foothold in the gas exploration fairwayof the Mackenzie Delta in the Northwest Territories in Marchthrough a property swap with Husky Oil, AEC is expanding itsnorthern presence through an exchange of interests with Anadarko.AEC will purchase a one-third interest, totaling one million netacres, in Anadarko’s Exclusive Option to Lease agreement in threemillion gross acres of Arctic Slope Regional Corp. lands in theAlaskan foothills. This will allow AEC access to enormous potentialgas resources within Alaska. Anadarko will receive a 37.5%interest, totaling 200,000 net acres, in AEC’s two Mackenzie Deltaexploration licenses. Additional terms of the exchange were notdisclosed.

“This exchange of interests with Anadarko, combined with ourrecently announced world class oil exploration opportunities innorthern Alaska, has the potential to establish this region as anew growth platform for AEC,” said AEC CEO Gwyn Morgan. “Thesebasins have been recognized as having world scale resourcepotential.”

Undiscovered reserves for onshore Mackenzie Delta and Alaskanfoothills are estimated by government agencies at up to 40 Tcf.Active gas exploration programs in both areas provide AEC with thepotential to supply significant long-term gas volumes from thenorthern frontiers into the North American gas market. In addition,operations in both hydrocarbon regions position AEC to benefit,whether Canadian or Alaskan gas moves to markets first.

There are as many as six proposals for Arctic pipelines, withCanadian authorities expecting to see formal applications emergingin 2001. All are variations on dormant projects left over from the1970s, the still-missing northern link in the Alaska Natural GasTransportation System and a Canadian-based route through theMackenzie Valley.

“Increasing our Canadian holdings in the Mackenzie Delta fitsour long-term strategy of providing natural gas to North Americanmarkets,” said Anadarko Chairman Robert J. Allison. “We believeArctic gas will find its way to Canadian and American consumersthrough one or more of the pipelines being proposed from Canada andAlaska. Because Anadarko also holds a significant acreage positionon the Alaska North Slope, this purchase puts us in a betterposition to have gas available for delivery into whatever pipelineis ultimately built, whether from Alaska or Canada or both.”

The 37.5% working interest in the Mackenzie Delta purchased byAnadarko consists of two onshore blocks adjacent to the naturalgas-rich Parsons Lake Field. Alberta Energy serves as operator,with a 37.5% working interest in the two blocks; Gulf Canada ownsthe remaining 25%.

In another development, Anadarko Canada submitted a successfulbid for an exploration license on one of the MackenzieDelta/Beaufort Sea tracts offered in the Aug. 14 sale by theMinister of Indian Affairs and Northern Development. Anadarkoacquired a 100% working interest in Exploration License No. 407,which is centrally located in a region where 53 fields withreserves of 9 Tcf of gas and 1 billion bbl of oil already have beendiscovered. Exploration License No. 407 covers about 176,000 acresand is immediately northwest of the giant Taglu Field and near theAEC/Anadarko Mackenzie blocks mentioned above.

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