Exxon Mobil president optimistic about future of Arctic gas pipeline
18:05:59 EST Nov 8, 2005 - BILL GRAVELAND
CALGARY (CP) - The president of Exxon Mobil said Tuesday he still expects the stalled Mackenzie gas pipeline to become a reality.
But Rex Tillerson provided few details to reporters about his reasons for optimism nor a timeline following his first public address in Canada since his appointment as president. "My expectation is the Mackenzie pipeline will go forward. I think there's been good progress made in dealing with a number of longstanding issues regarding aboriginal claims and benefits and compensation that they expect," said Tillerson.
"I think it's a long process and there's a lot of interests that need to be addressed but we continue to make good progress and my expectation is we will ultimately get across the finish line with this thing," he said.
Exxon Mobil, the world's largest publicly-traded energy company, has a key stake in the Mackenzie project through its majority ownership of Calgary-based Imperial Oil.
Imperial (TSX:IMO) is the lead on the Mackenzie project along with partners Shell Canada (TSX:SHC), ConocoPhillips (NYSE:COP), Exxon Mobil (NYSE:XOM) and the native-owned Aboriginal Pipeline Group.
The partners were initially hoping to have the pipeline up and running by the end of the decade. But last April, the energy companies said they were shutting down most of the work on the line, saying they were being asked to pay hundreds of millions of dollars for social programs and land access rights that the various governments should be covering.
The $7-billion pipeline would carry natural gas from three discovered fields in the Mackenzie Delta across the Northwest Territories to join the existing gas pipeline system in northwestern Alberta.
The members of the consortium are expected to give an update to regulators about future plans for the pipeline later this month.
Tillerson, speaking at a Calgary awards ceremony for the Canadian American Businss Council, praised a decision by the Canadian government to provide $500 million over the next 10 years to deal with the socio-economic impact of the proposed pipeline project.
Murray Smith, Alberta's representative to the United States and a former provincial energy minister, doesn't think Tillerson's optimism is unwarranted.
"I think it's in Canadians interests to be optimistic about Mackenzie," said Smith.
"That pipeline is desperately needed for North American markets, it's deperately needed to add gas to the North American inventory which as you'll see this winter is going to be a very interesting scenario," he said.
The next 25 years will be a critical time for the oil and gas sector said Tillerson who estimated energy demand will grow by 50 per cent during that time. Eighty per cent of that growth will come from developing nations he said.
"It means we're going to need to produce considerably more than we do today, not just by expanding existing projects but also by new exploration," said Tillerson.
The Exxon president said he disagrees with those south of the border who favour "energy independence" pointing out Canada provides 15 per cent of U.S. oil imports and 85 per cent of U.S. natural gas imports.
"Given the dynamics of the international energy market greater energy interdependence, not independence, will make both of our nations stronger," he said.
© The Canadian Press, 2005
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