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Mackenzie Gas Project proponents halt project execution activities and focus
on priority issues
| Calgary, AB,
April 28, 2005
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Imperial Oil, on behalf of the Mackenzie Gas Project coventurers, announced
today a decision to halt project execution activities due to insufficient
progress on key areas critical to the project -- the finalization of benefits
and access agreements and the establishment of a clear regulatory process,
including timelines. The project will focus its efforts in these key areas,
and substantial progress will need to be made prior to the start of public
regulatory hearings, expected as early as late summer, to allow the project to
continue.
Project proponents are halting activities such as geotechnical data gathering
programs, the start of detailed engineering and preparatory work on
contracting for construction. However, the proponents are continuing all work
associated with advancing the regulatory review process, which is currently
focused on providing regulators with the information they require.
Progress on benefits and access agreements is being hampered by requests for
terms that are well beyond the direct responsibility of the project. In
addition, there are concerns about the pace and coordination of the regulatory
process and uncertainties associated with the northern regulatory regime, as
was experienced recently in pursuing regulatory permits to collect field data.
Meetings have been held with the federal and territorial governments, and
Aboriginal leaders to clarify the proponents' concerns and discuss how the
parties can move forward expeditiously to achieve what needs to be
accomplished to allow the project to proceed. The federal and territorial
governments are being asked to assist by taking ownership of matters that are
beyond the scope and responsibility of the project owners. This would enable
the project proponents to focus on their responsibilities. The proponents are
also seeking confirmation of a clear, firm regulatory review process,
including timelines consistent with those in the June 2002 Cooperation Plan
developed by regulatory authorities.
"Despite significant
effort and expenditures by the proponents and other parties, the reality is
that adequate progress is not being made in key areas. Our efforts to resolve
issues in these areas have not diminished. However, to achieve real progress,
approaches need to change," said J. Michael Yeager, senior vice-president,
Imperial Oil Limited. "We are refocusing our efforts to address these
essential issues. We are not giving up on developing a project that can be a
sound investment for the proponents and can contribute to sustained economic
development for the people of Canada's north, including employment, business
opportunities and growth."
"We remain committed to the
Mackenzie Gas Project," said Fred Carmichael, Chair of the APG. "It continues
to represent a significant opportunity for the people of the North to reduce
their reliance on government. Without this project there will be no job
creation, business opportunities or income for Aboriginal people, including
that derived from the APG's ownership interest. The project's future depends
on successful resolution of these issues, and all parties -- governments,
industry and the people of the North -- must work together to resolve these
issues if the project is to proceed."
Henry Sykes,
president of ConocoPhillips Canada, said, "We believe this project offers
significant opportunities to Canada, and particularly Northern Canadians, as
well as a competitive source of gas supply for North American markets.
However, resolution of these outstanding issues in a timely manner is
essential for the project to proceed.”
"The decision to
halt these work activities was extremely difficult, but it was necessary,"
said Ian Kilgour, Shell Canada's senior vice-president of Exploration and
Production. "The coventurers have serious concerns regarding the pace of
progress relative to our ongoing investments, and the lack of convergence in
some key project areas. We remain hopeful we can get back on track."
The Mackenzie Gas Project proponents filed applications for regulatory
approval in October 2004. The applications describe potential benefits
associated with the project including:
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Employment, economic activity and government revenues across the country
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New supplies of natural gas for North America
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Dividend income for northern Aboriginal people through their APG ownership
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Potential for future exploration and development creating additional natural
gas supplies, employment, economic activity and government revenues.
The Mackenzie Gas Project would include the development of an estimated six
trillion cubic feet of natural gas resource in the three largest onshore
fields discovered in the Mackenzie Delta, and construction of a gas and
natural-gas liquids gathering system, gas pipeline and related facilities.
The Mackenzie Valley gas pipeline would have an initial design capacity of 1.2
billion cubic feet per day and be expandable to accommodate gas from other
fields in the future.
The project is being proposed by
Imperial, ConocoPhillips Canada, Shell Canada, ExxonMobil Canada and the
Aboriginal Pipeline Group (APG). The APG was formed in 2000 to enable
ownership interest of the Aboriginal peoples of the Northwest Territories in
the proposed Mackenzie Valley natural-gas pipeline. TransCanada PipeLines
Limited is helping to facilitate and finance the APG's ownership, in addition
to other support, in the current phase of project development.
Imperial Oil Limited, on behalf of the MGP coventurers, will host a conference
call today, Thursday, April 28 at 3:00 p.m. (MST) to discuss this release.
To participate, please dial 1-888-458-1598 and when prompted enter pass code
2333019#. Please call in approximately 10 minutes prior to the start of the
conference call. If you are in the Calgary area or calling from outside of
North America dial 403-232-6311.
An archived recording of the
call will be available by dialing 1-877-653-0545, or 403-232-0933 in the
Calgary area and outside North America, and entering pass code 276862#.
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