The National Post is Canada’s second largest national paper.
CALGARY – The $16.2-billion Mackenzie Gas Project was long ago mothballed and exploration drilling in the Beaufort Sea is on ice, but Northwest Territories Premier Bob McLeod is determined to see the region’s billions of barrels of oil and trillions of cubic feet of natural gas developed. What’s more, he believes he’s found the financiers to pay for it.
With a newly minted agreement in hand that sets the stage for transferring oversight of mineral resources and oil and gas from the federal government to the territory, including rights to collect resource royalties for the first time, Mr. McLeod has begun quietly courting investment from China’s state-backed oil giants.
The N.W.T. premier last week met with representatives from 18 Chinese companies through the Canada-China Chamber of Commerce, touting the territory’s potentially recoverable resources of at least 6.2 billion barrels of oil and 71 trillion cubic feet of natural gas.
His audience included representatives from the China National Petroleum Corp., Nexen Inc. owner Cnooc Ltd., China Petrochemical Corp. (known as Sinopec), and the Bank of China. Mr. McLeod is counting on the companies’ deep pockets and deeper thirst for energy to help finance badly needed infrastructure and fund new drilling in the Beaufort Sea and in the Bakken-like shale in the central Mackenzie Valley.
“We can’t afford to have our oil and gas continue to be stranded like they have been for over 40 years now,” the premier said in an interview in Calgary. “We think that the Asian market is something we have to seriously look at, and with the sea ice conditions changing, the ability to transport out of the Northwest Territories is not as daunting a task as it used to be.”
So-called devolution won’t take effect until April 2014. It comes with companies such as Husky Energy Inc., ExxonMobil Corp., Imperial Oil Ltd., Shell Canada Ltd., MGM Energy Corp. and the Canadian unit of ConocoPhillips Co. set to begin probing the highly prospective Canol shale, where work commitments top $600-million and expectations are high that the formation will prove a northern counterpart to the Bakken shale in North Dakota.
The exploration is a bright spot on an otherwise spotty investment horizon. A continent-wide boom in shale gas long ago killed prospects for the Mackenzie Valley pipeline, a 1,200-kilometre artery designed to carry production from the northern delta south to Alberta.
Exploration in the Beaufort Sea has also been underwhelming to date, with the latest round of bids on offshore parcels failing to yield major spending commitments.
Even so, the combination of big reserves and companies with longer time horizons may see state-backed players venture north of the 60th parallel, John Hogg, vice-president of exploration and operations at Calgary-based MGM, said in a telephone interview.
For the rest of this article, click here: http://business.financialpost.com/2013/04/22/northwest-territories-targets-china-for-oil-and-natural-gas-development/