10 Companies Commit to New Canada Gas Exploration Leases

Drilling for natural gas will accelerate in Canada's Northwest Territories on new land leases for resource exploration obtained Thursday by 10 companies that aim to fill the proposed Arctic pipeline, the Edmonton Journal reported in its Friday editions.

The firms made commitments to spend $124.9 million on new exploration programs on five leases covering 2,010 square kilometers of the central Mackenzie Valley and the Mackenzie Delta, the report said.

The agreements with Indian and Northern Affairs Canada call for the work to be done over the next four to five years, the report said. The exploration schedule parallels the Mackenzie Gas Project's target of completing its $3-billion pipeline by 2009, the report said.

Participants in the new exploration include ChevronTexaco's Chevron Canada Resources, BP Plc unit BP Canada, Unocal Corp. division Northrock Resources, Husky Energy Inc.'s Husky Oil Operations, EOG Resources Inc., International Frontier Resources Corp., Pacific Rodera Ventures Inc. unit Pacific Rodera Energy, Paramount Resources, Petro-Canada and Apache Corp. unit Apache Canada.

Northrock president Dave Pearce said even though it is impossible to predict whether the Mackenzie project will hit its completion target, it is a key element in the gas outlook: "If there was no pipeline on the horizon that would paint a different picture," according to the report. Exploration results will be kept confidential for two years under lease rules that let drillers protect geological secrets long enough to expand their land positions, the report said. "You can infer from the bid (for additional property) that we're encouraged," Pearce said, according to the report.

Northrock won't be alarmed if the Mackenzie project is held up by the notoriously complex northern regulatory regime, the newspaper reported. The Mackenzie Valley is still a frontier where operations are remote and take time, Pearce said, according to the report.

Paramount president Jim Riddell, whose firm is in on two of the new drilling leases, said the Mackenzie project's plan for a 1,220-kilometre pipeline all the way to Inuvik is not the only option for tapping northern gas under discussion in the industry, the report said.

"We believe there's going to be something built," Riddell said, hinting a shorter link could be constructed to connect wells in the central Mackenzie Valley to the Alberta pipeline grid, the report said. He refused to disclose details of alternative plans, the report said.
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