Bob McCleod: Trying to streamline pipe build.
Canada racing Alaska on gas pipe
The race to finish the Northwest Territories’ Mackenzie gas pipeline before Alaska is heating up.
The territorial government says it is trying to streamline the regulatory process by ensuring requirements are in place by the end of this year to ensure industry is not mired by bureaucratic red tape.
“Both pipelines are needed but we definitely feel the Mackenzie gas pipeline needs to go ahead first. The volume of natural gas in Alaska is significantly greater and if that goes ahead first we don’t see there will be a need for Mackenzie for a number of years,” said the territory’s minister of industry, tourism and investment, Bob McLeod, during a press conference at OTC Houston.
The panel report, scheduled for release in December, will include environmental assessments and feedback from public hearings.
The government has already negotiated access and benefit agreements with five of six aboriginal communities along the pipeline’s right-of-way.
McLeod said negotiations with the sixth reserve are “going quite well” and are expected to wrap up shortly.
The estimated C$16.2 billion (US$13.7 billion), 1700-kilometre pipeline will have a capacity to carry 1 trillion cubic feet of gas from the Beaufort Sea to continental markets. McLeod said it will be built with the potential to increase capacity.
“At the Beaufort Sea the potential for natural gas is 92 trillion cubic feet and Alaska is 135 trillion cubic feet. These reserves are quite significant.”
McLeod said he expects industry to take up to one year to review the panel report’s recommendations before deciding whether to proceed or not. It is further expected construction will take up to three years and first flow is should follow by the end of 2014.
“Arctic gas – when produced and brought to southern markets – can play a key role in addressing the rights and demands of energy in North America,” said McLeod.
In the meantime the territory and the Nunakput region, which includes the Beaufort Sea, hopes exploration in the region will continue to pick up.
Member of legislative assembly for Nunakput, Jackie Jacobson, said he is optimistic work in the Beaufort Sea will translate into long term employment for the community.
“The pipeline’s one thing but where we’re going do really well is the offshore drilling. It’s more immediate and more long term,” said Jacobson.
A recent offshore land lease sale in the deep water of the Beaufort generated more than C$2.1 million, and MGM Energy has drilled three wells.
But the company announced today it was delaying plans to drill three additional wells because the approval process for the project is taking too long
MGM said it restructured its exploration agreement with supermajors Chevron and BP so it will no longer be committed to spending up to C$60 million on three final wells in their deal by April next year.
Instead, it will drill the wells within three years after the Mackenzie Gas Pipeline consortium, led by Canadian giant Imperial Oil, makes its decision to go ahead with the 1220 kilometre (760 mile) gas line in the Northwest Territories, according to a Reuters report.
The company will also defer remaining seismic work, which it pegged at C$26 million.
"Given the complete lack of progress on the regulatory process, in particular the Joint Review Panel, and the lack of a fiscal agreement between the pipeline proponents and the government of Canada, we believe that deferral of spending ... is in the best interests of our shareholders," MGM president Henry Sykes said in a statement.