Imperial Oil Ltd. and joint venture partner ExxonMobil Canada have acquired exploration rights for a parcel in the Canadian portion of the Beaufort Sea, which may signal renewed optimism for the long-delayed Mackenzie Gas Project (MGP).

Imperial and ExxonMobil were awarded the exploration license after bidding a work program of C$585 million (US$563 million). License terms indicate that Calgary-based Imperial’s minimum commitment is to pay for 25% of the work, or C$73.1 million (US$70.08 million). ExxonMobil Corp. is the majority owner of Imperial with a 69.6% stake.

“Imperial is pleased it was successful in acquiring this offshore acreage,” said Imperial’s Randy Broiles, senior vice president, resources. “This parcel is a major addition to Imperial’s undeveloped acreage position. Although the Arctic remains a high-potential, technology-intensive frontier area, this presents a potential opportunity to add to our resource base in the Beaufort Sea and is consistent with our continued interest in energy development for Canada.”

Imperial and ExxonMobil also are linked to the proposed C$16.2 billion (US$14.5 billion) MGP, which would carry gas supplies from Canada’s Far North, which would include the Beaufort Sea area.

Imperial is the lead sponsor of the Mackenzie Delta Producers Group, which includes Conoco Canada, Shell Canada Ltd. and ExxonMobil. The producers and the Mackenzie Valley Aboriginal Pipeline Corp. are preparing regulatory applications to develop onshore natural gas resources in the Mackenzie Delta, which would include a 750-mile gas pipeline.

Prospects for the MGP appeared to recede in June when the Canadian government prolonged negotiations with the sponsors (see Daily GPI, June 12). ExxonMobil CEO Rex Tillerson also cast doubt on the project in May after telling company shareholders the gas pipeline was “not economic at the current costs” (see Daily GPI, May 31). ExxonMobil had no additional comment on the joint venture with Imperial.

However, if the producers now involved in exploration efforts prove successful in tapping into the estimated 30 Tcf of gas reserves in the Beaufort Sea, they will need a gas pipeline to carry them. And interest in the Beaufort Sea’s potential seems to be growing. The Minerals Management Service (MMS) greenlighted a venture by Shell Offshore Inc. to begin a three-year exploration effort to gauge the potential of the Sivulliq prospect in the Alaskan portion of the Beaufort Outer Continental Shelf, and drilling is scheduled to ramp up in August on the first of a dozen wells 30 miles offshore (see Daily GPI, July 11).

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