Imperial Oil Moves Forward with Mackenzie Delta Gas Project

Imperial Oil Resources reports that funding and participation agreements between the Producers, the Aboriginal Pipeline Group (APG) and TransCanada PipeLines Limited have been reached and the Preliminary Information Package (PIP) for the Mackenzie Gas Project is being submitted to relevant regulatory authorities.

The Mackenzie Gas Project is being proposed by Imperial, ConocoPhillips Canada, Shell Canada Limited, ExxonMobil Canada (the Producers) and the APG.

The APG was formed in 2000 to represent the ownership interest of the Aboriginal peoples of the Northwest Territories in the proposed Mackenzie Valley Pipeline.

The filing of the PIP is a key step in the process leading to the submission of applications for the development of the fields and pipeline facilities for the approximately $5-billion (Cdn.) Mackenzie Gas Project. The Mackenzie Gas Project proponents are prepared to advance work to support filing regulatory applications in 2004. With regulatory and right-of-way approvals, followed by a potential decision to construct, gas production in excess of 800 million cubic feet a day could begin before the end of the decade. The specific timing will be dependent on the support and cooperation of all parties -- regulatory authorities, landowners and governments.

"This is a very significant step forward for the Mackenzie Gas Project. The commercial agreements reached are a win for all parties and conclude a lengthy, but constructive process," said K.C. Williams, president and chief executive officer, Imperial Oil Resources, on behalf of the proponents. "These agreements enable the APG to become a full participant in the Mackenzie Valley Pipeline, and allow the project proponents to move forward with submitting the PIP and advancing other work required to support preparation and filing of regulatory applications."

APG chair Fred Carmichael said, "I am excited to report to the aboriginal community of the Northwest Territories that we have established the framework for an unprecedented partnership between the aboriginal population and industry." The terms of the agreements strengthen the position of the Aboriginal peoples of the North in the proposed Mackenzie Valley natural gas pipeline, he said. "These agreements address APG financing, enhance the rights of the APG as defined in the 2001 Memorandum of Understanding and chart a course for the project to move forward in a way that will create real and lasting benefits for the people of the North."

"TransCanada is pleased to bring its broad pipeline expertise and resources to support advancement of the Mackenzie Valley pipeline," said TransCanada chief executive officer Hal Kvisle. "Natural gas from northern Canada will help meet anticipated increases in demand and will help keep our existing pipeline facilities full, which is good for both shippers and users of natural gas."

Natural gas liquids produced as part of the Mackenzie Gas Project will connect with the existing Norman Wells liquids pipeline to Zama, Alberta.

The PIP is being submitted to the boards, committees and agencies responsible for assessing and regulating energy developments in the Northwest Territories, consistent with the June 2002 Cooperation Plan for the coordinated review process developed by the regulatory authorities. Intended to assist regulators in finalizing arrangements for a coordinated regulatory review, the PIP includes preliminary information on environmental studies, public communication and consultation, the proposed pipeline route, size and capacity ranges, and developments for the Taglu, Parsons Lake and Niglintgak fields.

The Mackenzie Gas Project involves natural gas production facilities, compression and gathering pipelines in the Mackenzie Delta area, and a pipeline system in the Mackenzie River valley. Imperial is the operator of the gas gathering and pipeline systems for the project. Imperial, ConocoPhillips and Shell will operate the three fields.