Canadian producers are signaling the Mackenzie Gas Project will trigger a wave of northern exploration and supply development if the pipeline proposal can be steered past aboriginal land-claims and into construction.

Regulatory filings confirm that many more companies than those sponsoring the Mackenzie project (Imperial Oil, Shell Canada, ConocoPhillips Canada and ExxonMobil Canada) intend to help build a new branch of the Canadian industry that reaches long-awaited connections to markets for 1970s discoveries. A who’s-who of other top Canadian gas producers want in on the action and make it plain they regard the Northwest Territories as prime territory for growth.

The signal comes in the form of a filing by a coalition titled the Mackenzie Explorer Group before a pipeline joint review panel of federal, territorial and aboriginal authorities. The coalition includes Anadarko Canada, Apache Canada, BP Canada, Burlington Resources Canada, Chevron Canada, Devon Canada, EnCana Corp., Nytis Exploration and Petro-Canada.

The explorer group, in a letter of comment on the proposed mandate for the joint review panel, says it should make sure the economic as well as the environmental side of the Mackenzie project should be crafted to ensure the results live up to the regulatory theory of “sustainable development.”

The northern plan should include making sure the pipeline is sized to accommodate territorial production growth, the explorer group says. It recommends “assuring access to those facilities on reasonable terms and conditions, as well as an expansion policy that will accommodate new hydrocarbon discoveries on a timely basis, thereby avoiding the need for potentially redundant facilities and associated environmental disturbance.”

Also “in accordance with the principle of sustainability,” the explorer group says the Mackenzie plan “should address in detail the steps taken to date, and those proposed for the future, to accommodate natural gas and gas-liquids production by companies that are not members of the proponent consortium.”

Explorer group members hold extensive packages of northern Canadian drilling rights. While field activity is in a lull as the industry awaits the outcome of the Mackenzie regulatory review and parallel aboriginal land-claims negotiations, members of the group and other producers operating outside the pipeline sponsor consortium have been expanding northern holdings.

A June sale of exploration rights on the Mackenzie Delta and in the central Mackenzie Valley awarded 776 square miles of gas prospects to Chevron, BP, Northrock Resources (a Canadian affiliate of Unocal), Husky Energy, EOG Resources, International Frontier, Pacific Rodera Energy, Petro-Canada, Paramount Resources and Apache.

The current version of the Mackenzie project calls for a pipeline that would go into service with about 1 Bcf/d of delivery capacity then gradually expand with additions of compressor power to 1.9 Bcf/d. The non-affiliated explorer group is expected to press for maximum flexibility, including a pipe installation that anticipates long-range growth and includes possibilities of adding gas receipt points as exploration develops along the 760-mile route.

While the federal government remains unable to lay to rest fears among Mackenzie project supporters such as TransCanada PipeLines that unsettled aboriginal land claims jeopardize the plan, the authorities appear to be determined to expedite the environmental review process.

The national government recommends keeping a lid on a colossal environmental can of worms and leaving it in Ottawa. Natural Resources Canada (the federal energy department) urges the northern project review panel to keep to a minimum any investigations into issues raised by Canadian ratification of the Kyoto treaty on reducing greenhouse-gas emissions.

NRCan urges the panel to steer clear of asking the Mackenzie project sponsors for any guesswork about practical actions that will eventually be taken to implement the Kyoto commitment and how they might affect northern gas. “Although the panel needs to understand the context and current situation with respect to greenhouse gases, much of what is being asked for [in the draft mandate for the northern pipeline review] is in fact information that is in the purview of the federal government,” the federal agency told the northern regulators.

“In the area of greenhouse gas emissions, the government is still developing protocols, policies or initiatives. It is unfair to expect the proponent [of the Mackenzie project] to provide this information or even comment on it.”

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