Mackenzie Gas Project still breathing

Gary Park

For Petroleum News

In danger of becoming the answer to a trivia question, Canada’s Mackenzie Gas Project is not yet ready to fade into history.

Since gaining Canadian government approval four years ago, along with obtaining a National Energy Board Certificate of Convenience and Necessity, the Arctic gas venture has retreated from the public spotlight other than advising the NEB that the cost estimate for moving up to 1.9 billion cubic feet of gas per day has climbed to C$16.1 billion.

But Northwest Territories Industry Minister Dave Ramsay is adamant that the project “is not going to fall by the wayside” especially if the price of gas rebounds and an LNG opportunity “presents itself.”

For him, the MGP is vital to the economic wellbeing of the NWT and its aboriginal people.

And his optimism quickened earlier in May at the Offshore Technology Conference in Houston when he met with executives from ExxonMobil, the 69.6 percent owner of Imperial Oil, the lead partner in the MGP consortium along with ExxonMobil Canada, Shell Canada and ConocoPhillips Canada.

Imperial has already set the wheels in motion to gain an extension on its Certificate of Convenience and Necessity which is due to expire at the end of 2015.

In a letter to the NEB it asked for a meeting to “seek guidance on the process required for the board to consider an extension of the date for commencement of construction.”

“While industry circumstances and markets have changed in the intervening years (since the certificate was issued in 2011) the project proponents believe the Mackenzie Gas Project remains in the best interests of the North and Canada and will be proposing an extension to this date,” Imperial said.

Imperial spokesman Pius Rolheiser told the Canadian Press that although the details of talks with the NEB are confidential, the company is continuing to evaluate how changes to the North American natural gas market could “potentially influence a path forward for the project.”

Ramsay told Petroleum News that without knowing how long an extension Imperial might seek, 5 to 7 years “would probably be a good timeframe.”

If British Columbia becomes an outlet for LNG exports, there is reason for the MGP partners to retain their access to Mackenzie Delta gas.

Ramsay said that given the industry investment in the project, along with a heavy commitment by the NWT government and the aboriginal community, it makes no sense to abandon the work done this century on a lengthy and costly regulatory process.

He noted that ExxonMobil and Imperial are joint-venture partners in the proposed WCC LNG project that has an NEB permit to export 30 million metric tons a year, making it one of the four largest of the 19 projects proposed for British Columbia.

“Mackenzie gas is conventional and would be an excellent supply source for any LNG project,” he said.

The OTC conference also gave Ramsay an opportunity to continue his discussions with companies looking to invest in the Arctic, notably Norway’s Statoil.

Although unable to disclose what Statoil might be interested in “they are certainly a world-class company with a tremendous amount of experience in the Arctic setting,” he said.

For now, Ramsay said the NWT government is answering Statoil questions on the political and environmental regulatory aspects of exploration in its region, especially since the territory gained jurisdiction over onshore activities earlier this year.

He said the discussions have also covered “how partnerships might work. Otherwise we’ll have to take a wait-and-see approach.”