Mackenzie gas producers award preliminary pipeline contract

Posted: Sunday, May 19, 2002

CALGARY, Alberta (AP) -- Natural gas producers in Canada's Mackenzie Delta have awarded a contract for preliminary engineering work for a proposed pipeline to bring their rich natural gas deposits to southern markets.

The project is a rival to the proposed natural gas line from Alaska's North Slope.

The Canadian contract, announced Thursday, went to ColtKBR, a firm with deep roots in northern Canada and connections to Dallas-based Halliburton. The company has been involved with the pipeline proposal for several years.

ColtKBR will study and design the routing of the pipe's main line down the Mackenzie Valley, as well as ancillary facilities such as compressor stations and gathering lines. The company will also look at infrastructure such as roads, helipads, boat docks and camp locations, said Hart Searle of Imperial Oil Ltd.

The contract includes helping the producers and aboriginal groups involved in the project through the regulatory process. It will provide cost estimates to help with the decision on whether the project -- estimated to cost $2 billion -- is economically feasible.

The line would be expected to move a billion cubic feet of gas daily, about a fourth the proposed capacity of the line from the North Slope. It could be completed by 2007 at the earliest.

Imperial's partners are Shell Canada Ltd., ExxonMobil Corp. and Conoco Inc., which is planning to merge with Phillips Petroleum Corp. later this year.

''I think it sends the message that we are moving forward. We are building momentum and we're striving towards completing the work we need to do to file our regulatory application,'' said Searle of Imperial Oil.

Gas producers in Alaska have concluded that a pipeline route down the Alaska Highway is too expensive and risky to build at this point.

ColtKBR is a long-term joint venture between Calgary-based Colt Engineering and Kellogg, Brown and Root, a subsidiary of Dallas-based engineering multinational Halliburton Co.

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