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Action on Mackenzie Pipeline Could Come This Year, CEO Says

Movement on the oft-delayed Mackenzie Gas Project (MGP) could come some time this year, but the pipeline will take "at least 10 years" to build because of the engineering studies, permitting process, open season and actual construction it will require, ConocoPhillips CEO Jim Mulva said Thursday.

"We are working closely with our partners, with the regional authorities, with the stakeholders, and I'm pretty optimistic that we'll see something happen in 2008 on the Mackenzie Delta pipeline," Mulva said during a conference call with financial analysts. "I think it will come before the Alaska pipeline."

"The Mackenzie Delta pipeline is important for our partners; it's important for Canada. It makes sense for the Mackenzie Delta pipeline to come first, before the Alaskan pipeline. And it's further along than Alaska," Mulva said.

Mulva did not offer a timeline on when he thought the Mackenzie pipe could be built, but he reiterated that he was optimistic that something major would be announced soon, perhaps in the next few months.

The proposed MGP pipeline would ship as much as 1.9 Bcf/d across 750 miles from the Mackenzie Delta south to the Beaufort Sea Coast. However, the project has suffered delay after delay, with its fate tied to efforts of the producer consortium. Last year Imperial Oil Ltd. said the economics of the pipe were "not robust," and the group has since been renegotiating MGP's options with the Canadian government (see NGI, Sept. 3, 2007; April 16, 2007). Late last year the Canadian government opened a new round of financing discussions for the project but stressed that no public money would be available (see NGI, Dec. 24, 2007).

Mulva also said he hopes ExxonMobil Corp. will join ConocoPhillips and BP plc on the proposed Denali pipeline project, which would connect natural gas fields in Alaska's North Slope to the Lower 48 (see related story).

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