Calgary-based AEC Oil & Gas secured an anchor land positionin the gas exploration fairway of the Mackenzie Delta in theNorthwest Territories. The lands, which were acquired through aproperty swap with Husky Oil, give the partnership of AEC West Ltd.and Alberta Energy Company Ltd. rights to more than 400,000 netacres.

“While a new area for AEC, this land complements AEC’s earlierinitiatives into the Northwest Territories. It gives us tremendousexploration upside that ensures AEC has a significant presence inCanada’s new natural gas frontier,” said Randy Eresman, AEC Oil& Gas president.

The AEC lands are within the area where the Inuvialuit RegionalCorp. recently announced plans to offer development concessions onmore than one million acres in six blocks near Inuvik andTuktoyaktuk where the Mackenzie River enters the Beaufort Sea.

“The timing for taking this land position is excellent, at theforefront of renewed interest in the Mackenzie Delta. Our newposition is in an area where land claims have been settled and itenables us to pursue our interests in concert with Northernresidents who have signaled a desire to join with energy producersin responsibly developing the resources of the North. There is alsogrowing consensus on pipeline infrastructure, and we know themarkets exist for these northern resources, all of which isintegral 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 gaspricing in North America, but also there is an excess of pipeleading out of western Canada. So that creates the opportunity tobring gas into western Canada from the Northwest Territories, andthat opportunity really hasn’t existed before.”

Eresman cited figures that say between 5 and 10 Tcf of gas hasbeen found in the Mackenzie Delta. He said the company believesthat generally a gas price of $3/Mcf or more at Chicago isnecessary to make development work. Timing to bring the gas southfalls in the five- to 10-year range, he said. “We believe that thefundamentals for gas in North America, especially in westernCanada, are great into the future. We see growth in marketsexceeding supply, and there is evidence of that in most of themajor basins around North America.

“What makes this really exciting for us is this is one of thehighest reward areas that we’ve entered into in North America in along time. Pool sizes here are measured in Tcf. We believe this tobe a great opportunity to build the future of our company withreserve growth in that five- to 10-year period. This is a rareopportunity in North America.”

Eresman said the new land position in the northern portion ofthe Territories complements AEC’s current oil exploration programin the central Territories where the partnership has acquiredrights to more than 400,000 net acres in two exploration licensesin the Sahtu region close to Norman Wells. AEC has two rigsdrilling in this region and plans up to five wells this year. AECowns 60% and Renaissance owns the remaining 40% interest.

Joe Fisher, Houston

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