Richard Gleeson
Northern News Services

Yellowknife (Dec 10/01) - Multi-billion dollar mergers and takeovers among international oil and gas giants have created new twists in the race to ship northern gas to the energy-starved United States.

On Nov. 18 Houston-based Conoco completed a $35 billion merger with its Oklahoma neighbour, Phillips Petroleum.

"Clearly, the Mackenzie Delta is very important to Conoco and Alaska is very important to Phillips," said Conoco spokesperson Peter Hunt.

"I think it's reasonable to presume that this increases the impetus to find economically feasible ways of developing both sets of reserves in a way that neither one strands or blocks the other."

Hunt cautioned that approval of the merger by U.S. competition regulators is still roughly nine months away. Until then, the companies must continue to operate as separate organizations.

With the merger, two of the three corporations with the largest holdings in the Mackenzie Delta now have even larger holdings in Prudhoe Bay.

ExxonMobil is the other conglomerate with a foot in each camp. One of its subsidiaries, Imperial Oil, holds the largest share of known reserves in the Delta.

The ownership shifts turn what was once a competitive situation into one where co-operation seems more logical. It also raises the profile of a pipeline route that seemed to be discarded.

Bickering over the relative merits of a pipeline to ship Alaskan gas south and those of a Mackenzie Valley pipeline have overshadowed another route that was once considered more profitable than either.

The 'over the top' route would link Prudhoe Bay to the Mackenzie Delta via an undersea pipeline. Gas from both fields would then be piped south down the Mackenzie Valley.

The added volume would require a larger pipeline than that contemplated for Delta gas alone.

"In principle, if you build a bigger diameter pipe, that would normally improve the economics," said Hunt. "Beyond that, it's really not possible to comment in detail."

The main drawback of the offshore route is the environmental opposition it would prompt. Environmental groups in Alaska have promised a war of protest if it is proposed.

For more than a year, Mackenzie Valley producers have studied the feasibility of a Mackenzie Valley pipeline. Early in the new year, Alaska producers expect to complete their own $100 million study early of the feasibility of building a pipeline along the Alaska highway and through the southern Yukon.

"From the perspective of the Mackenzie Delta producers group and the opportunity they're looking at, it's business as usual," said Hart Searle, the group's spokesperson.

He said the producers still plan to decide whether or not to proceed with the pipeline by the end of this month.

One of the few things both groups of producers have agreed upon in their pre-merger days was that there are not enough resources to build both an Alaska highway pipeline and a Mackenzie Valley pipeline at the same time. Environmental approval and construction of either pipeline will take a minimum of six years.

"The most viable one, and the cheapest one so far is the Mackenzie Valley route," said NWT Development Minister Jim Antoine. "We don't want to see Beaufort-Delta gas stranded."

Antoine said interest in the Mackenzie Valley pipeline and arctic gas was high among oil executives at the Arctic Gas symposium in Texas last month.