For the third time this summer, Canadian natural-gas producershave underlined the urgency of their quest for new supplies bymoving into position to tap Arctic discoveries that have beenallowed to lie fallow for a quarter of a century.

This time, Alberta Energy Co. and Anadarko Petroleum Corp. bothincreased their northern holdings by buying into each other’sinterests on Alaska’s North Slope and Canada’s MackenzieDelta-Beaufort Sea region. AEC is Canada’ s top gas producer withabout 1 Bcf/d, while Anadarko ranks 17th with about 280 MMcf/d as aresult of its merger with Union Pacific Resources after itstakeover of Canada’s Norcen Energy Resources.

Alberta Energy’s wholly-owned AEC Oil & Gas (USA) Inc.picked up a one-third interest in a 3.1 million acre lease held byAnadarko in a foothills region south of Prudhoe Bay. At the sametime, Anadarko bought a 37.5% interest in a 530,000-acreDelta-Beaufort prospect held by AEC. The deals were described asseparate transactions rather than a straight property swap, and nofinancial terms were disclosed.

Both companies indicated they want to be in a position to takeadvantage of whatever transportation project emerges as the victorfrom a developing contest over northern routes. The rivalryinvolves multiple variations on two main themes: reviving thedormant Alaska Natural Gas Transportation System, and bringing backto life proposals for a Mackenzie Valley route. Anadarko chairmanRobert Allison said “we believe Arctic gas will find its way toCanadian and American consumers through one or more of thepipelines being proposed from Canada and Alaska.”

While both variations on the Arctic gas theme propose eventuallyto hook up all the U.S. and Canadian supplies, the ANGTS sponsorswant to take Alaskan production first and the Mackenzie scheme putstop priority on deliveries from the Delta-Beaufort. Allison said”this purchase puts us in a better position to have gas availablefor delivery into whatever pipeline is ultimately built, whetherfrom Alaska or Canada or both.”

AEC pointed out that the combined gas resources of the NorthSlope and the Canadian Arctic are estimated at about 40 Tcf so far,with exploration still in early stages by standards of establishedproduction basins. The deal follows two successful summer auctionsby Canada’s federal government of new drilling prospects in theDelta-Beaufort and Mackenzie Valley regions. Canadian producerstook on 5,685 square miles of resource leases, paying C$523 million(US$355 million) in exploration work commitments over the nexteight years.

Farther south, PanCanadian Petroleum Ltd. also underlined theurgency of the supply quest with a C$702 million (US$475 million)purchase of assets from Montana Power Co. (see related story thisissue). The package — primarily located along the Alberta-Montanaborder, with side interests in Colorado, Wyoming and Oklahoma —included reserves of 550 Bcf of gas, associated processing plantsand pipelines, and 984,000 acres of resource lands.

PanCanadian, heir to vast 19th-Century land grants to parentCanadian Pacific for building a transcontinental railway, isalready Canada’s second-ranked gas producer with 850 MMcf/d andowns enough drilling prospects to ramp up its output significantly.But the company said it regarded this as the time to grow evenbigger in gas when Montana Power put up for sale its holdingsbeside PanCanadian’s land spreads across southern Canada.

Gordon Jaremko, Calgary

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