Yahoo! News: Shell Canada not ruling out accessing Alaskan gas through Mackenzie line: “Shell Canada still believes that a $7-billion plan to build a natural gas pipeline down the Mackenzie Delta in the Northwest Territories could eventually be used to access much larger deposits of gas westwards in neighbouring Alaska.” (ShellNews.net) Posted 20 Nov 04

JAMES STEVENSON

CALGARY (CP) - Shell Canada still believes that a $7-billion plan to build a natural gas pipeline down the Mackenzie Delta in the Northwest Territories could eventually be used to access much larger deposits of gas westwards in neighbouring Alaska.

Clive Mather, the new chief executive of Calgary-based Shell (TSX:SHC - news) said Friday a Mackenzie valley pipeline could still be used to access Alaskan gas instead of a separate line, estimated to cost about $20 billion US.

"There is a lot of gas to the west," Mather said in an interview with The Canadian Press on Friday. "So from an infrastructure point of view, it seems like a pretty damn important investment."

"Obviously, the complexity in terms of international politics and whatever goes up another order of magnitude but you can't help looking at it as an international energy guy and say 'well, these things tend to happen.' "

Alaska is believed to have about 35 trillion cubic feet of gas reserves that currently have no way of accessing the market - about six times the amount of known reserves in the Mackenzie Delta.

Shell is partners in the Mackenzie pipeline project, along with Toronto-based Imperial Oil (TSX:IMO - news), its parent company ExxonMobil, Texas-based ConocoPhillips (NYSE:COP - news) along with affected Aboriginal groups.

Several years ago, Mackenzie line proponents appeared to be in a race with those looking to build a separate line to Alaska following the Alaskan highway northwest from Alberta.

But the Mackenzie project now appears to be well ahead of an Alaskan line after filing for regulatory approval last month. Energy companies involved are hoping that Canadian gas could be flowing south to energy thirsty U.S. markets by the end of the decade.

Best guesses for a separate Alaskan line are to have gas flowing by 2014 at the earliest.

"If you want to start bringing gas from Alaska through Mackenzie Delta, having the pipeline in place seems to be a very important thing for us to do" said Mather.

Alaska has always been in favour of a separate gas pipeline to access its massive reserves in the North Slope, rather than shipping its gas over the Mackenzie line.

Legislation passed by the U.S. Senate last month included a ban on any proposed northern routes that would take the gas under Prudhoe Bay, bypassing Alaskan markets and into the Mackenzie line.

Still, the new Shell Canada boss said he expects renewed interest by the U.S. federal government to access northern gas.

"We're through the US elections and we now have a new administration. And they have energy pretty high on their agenda so I wouldn't be surprised if they took an active interest in this particular file," he said.

"When you look at those sorts of decisions, there are many factors that come into play - not just economic ones. Issues about security of supply and national sovereignty also come into play."

Mather left his former job as head of Shell US Ltd. to become chief executive of Shell Canada in August after former CEO Linda Cook went back to the parent company.

On Thursday, Shell announced plans to raise its capital spending next year by more than 60 per cent to $1.8 billion, spreading the cash across Canada and the energy company's diverse assets.

Shell's spending program broadly distributes money to the integrated oil company's natural gas and growing oilsands operations as well as its refinery and gasoline station network.

Shell is one of Canada's biggest integrated energy companies with natural gas production in Western Canada and off the coast of Nova Scotia, major oilsands interests in northeastern Alberta, refineries in Edmonton and Montreal and a national chain of more than 2,100 gas stations.

The company employed 3,850 people at the end of 2003.

While Shell Canada trades publicly on the Toronto stock market, it is 78 per cent owned by Royal Dutch/Shell, one of the world's biggest oil companies.

On the Toronto stock market, Shell shares rose 65 cents to $75.40.

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