In the first of sporadic teleconferenced “Afternoons with Archie,” Conoco CEO Archie Dunham on Thursday told the investor audience that while he found current natural gas prices “disconcerting,” he was pleased about the electric demand on the East Coast this week and continued to remain “very bullish” on natural gas in the immediate and near terms. Dunham, who had no planned agenda during the 20-minute call, also said that the company’s second quarter earnings had made him “cautiously optimistic” about the rest of the year.

“Gas price depends on the amount of electric demand…which is gone in the last part of August, maybe September,” which then determines “if we have a winner,” Dunham said of current prices. “Ninety days ago, we were very, very concerned about natural gas,” and that scenario has changed with storage at an all-time high. He predicted that natural gas prices could drop in the next two weeks, but said he expected gas to hover around $3.50 in the short term.

Asked about budget plans, Dunham said the board would begin working on next year’s plan in about six weeks, but added that he had no “killer concerns” about what the company faced. “We’re going to have a great 2001,” he said, referring to his optimism about OPEC putting together what he called a cohesive crude oil policy in a region where Conoco holds extensive acreage. He also discounted a question about Conoco’s lack of exploration thus far in 2001, stressing that most of the planned E&P was set for the second half of 2001 — a decision made last year.

“We’ve had a highly sensible exploration program for five years,” said Dunham. Referring to the company’s average 70% success rate, he noted there had been 28 successful wildcats worldwide in the past three years. “We are still very bullish on exploration in 2001…(there will be some) exciting wells drilled in the last half of the year,” including some in the deepwater Gulf of Mexico. “It has been planned that way for 12 months,” he said.

Although he made no reference to it and no questions were asked about it, at a news conference in Calgary on Wednesday Dunham had said that the new Conoco Canada Ltd., formed since the company’s takeover of Gulf Canada Resources Ltd., had to have a stake in the Mackenzie Delta pipeline — even though aboriginal groups were demanding 100% ownership of the proposed pipe. Conoco now controls about 1.2 Tcf in the Canadian Arctic since its takeover of Gulf Canada. Dunham said the company, which employs about 1,200 former Gulf Canada employees, would be a more active proponent in developing Canadian Arctic gas than its predecessor.

A top priority for the new Conoco Canada, said Dunham, would be to bring Mackenzie Delta gas to market in four to six years, if possible. The Mackenzie Delta producers’ group, which now includes Conoco, is led by Imperial Oil Ltd., and it wants a two-thirds ownership in the pipe. However, it has to have unanimous aboriginal support before it can proceed with construction of the estimated C$3 billion project. Some aboriginal groups are balking at only a partial ownership.

Dunham told reporters he was taking a hard line on the Mackenzie Delta project because of problems Conoco had in the early 1990s in Alaska when it did not get what he thought was full value for its resources because it did not have a stake in the Trans-Alaska pipe.

“The owners of the pipeline, by adjusting the tariffs on the pipeline, could diminish the value of the producing properties, and that’s not going to happen again,” Dunham said.

The Conoco CEO also stressed that other Arctic proposals, including the North Slope proposals under consideration by producers, including a group formed by Exxon Mobil, BP and Royal Dutch/Shell Group, had to work together to develop the resources in both Alaska and Canada. And, he said, the Mackenzie pipe had to be part of the overall plan. “I cannot imagine a politician in Canada agreeing to a pipeline route that did not include Mackenzie Delta gas.”

The Exxon-BP-Shell group is close to completing a $90 million study of two possible routes for a pipe from the Alaska North Slope to the Lower 48. Only one of which goes through the Mackenzie Delta. Speaking at the Rocky Mountain Natural Gas Strategy Conference on Tuesday, Robert Malone, regional president of BP, said that in the “next couple of months,” the group plans to begin providing data “so that people can begin to see what we see, even though it’s going to be incomplete.”

The North Slope pipe proposals include a route that would travel the Trans-Alaska Highway, down through the Yukon and into British Columbia and Alberta, with interconnects to the Lower 48. Another route under study would travel from the North Slope to the Mackenzie Delta, down into the Northwest Territories and eventually into Alberta. It would include an underwater segment through the Beaufort Sea.

©Copyright 2001 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.