It appears increasingly likely that development of 35 Tcf of gasreserves in Alaska and another 6-9 Tcf in the Mackenzie Deltaregion of the Northwest Territories will be headed down parallelbut separate paths. Both projects, however, seem to be picking upspeed in reaction to the current favorable market situation.

Last week, the big three Alaskan gas producers announced plansto spend $75 million and put 100 employees on a feasibility studyto investigate development of Prudhoe Bay reserves and a pipelinethat would extend down the Alaska Highway through the Yukon to theCanadian gas grid. Not to be overshadowed by the Alaskan plan,however, the major Mackenzie Delta gas producers, Imperial OilResources, Gulf Canada Resources Limited, Shell Canada Limited andMobil Canada, said yesterday they, too, have made progress on afeasibility study on reserves development and have gainedsignificant ground on negotiations with local governments.

“We’re not ruling out a linked development of some sort [and ajoint pipeline plan] but that’s not the focus of our study,” saidImperial Oil spokesman Hart Searle. “We’re sticking to our knittingso to speak. We are of the view that the likelihood of a successfuloutcome would increase if any potential development were kept assimple and straightforward as possible. The Mackenzie Valley routefalls within that vein. That’s why we have not actively sought outlinkages with the Alaskan gas.”

K.C. Williams, senior vice president of Imperial Oil, said theproducers have developed a “beneficial relationship” with theAboriginal Pipeline Group (APG) and will be “working more directlywith the APG in 2001 to determine mutually acceptable arrangementsunder which a Mackenzie Valley pipeline could proceed.”

Formed earlier this year to facilitate development of aMackenzie Valley natural gas pipeline, the APG consists of morethan 30 Aboriginal leaders from the Northwest Territories. Theproducer group also has carried out extensive and open discussionswith more than 70 parties, representing a variety of interests.Imperial said the Government of the Northwest Territories (GNWT)and northern Aboriginal leaders support a pipeline project in theMackenzie Valley and the producer group is examining projectparameters.

“From Norman Wells in the Northwest Territories south intoAlberta today there’s an existing oil pipeline owned by Enbridge.From Inuvik in the Mackenzie Delta to Norman Wells is about 300miles and from Normal Wells to Zama, AB, the starting point of gasinfrastructure with NOVA, it’s about 540 miles. For that 540 milesyou have an existing right of way.” That leaves only 300 miles ofgreenfield in which to construct a new line.

Searle also noted that recent Northwest Territories leases salesin the delta have drawn strong interest from other producers, whomay jump on board the project. Although the three discoveries ofthe producers behind the Mackenzie project have tapped 6 Tcf ofreserves, a total of 9 Tcf have been discovered and the NationalEnergy Board estimates 55 Tcf of reserves remain undiscovered inthe region.

The current market situation has put development on the fasttrack. Based on progress to date, the Mackenzie producers plan tocommission further conceptual engineering work and initiate thecollection of baseline biophysical data in 2001. A draft regulatory”roadmap” already has been prepared, and Williams said the producergroup expects to begin work in 2001 on the development of aregulatory application.

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