Imperial Oil: Mackenzie Gas Pipeline Delayed Until 2018

Imperial Oil Ltd. (IMO) on Monday pushed back its schedule for a Northwest Territories natural-gas pipeline by four years, saying it wouldn't be complete until 2018 at the earliest due to continued regulatory delays.

Imperial Oil, of Calgary, will be able to decide whether to move ahead with the project in late 2013 if regulators approve the pipeline at a September hearing, and if the company makes progress on an agreement with the federal government over royalties and taxation of the pipeline, according to a letter the company filed with the National Energy Board.

The Mackenzie pipeline project was first presented to regulators in 2004 and scheduled to be complete by 2009, but was delayed, rescheduled in 2007 and delayed again as Imperial sought approval from the NEB, tribal groups, and a joint review panel composed of environmental, land-use and aboriginal regulators.

The project is aimed at transporting natural gas from the Mackenzie Delta in the Arctic Circle near the border with Alaska, where three fields will be able to produce 860 million cubic feet of gas per day from a reservoir holding an estimated 6 trillion cubic feet of natural gas. The pipeline would have an initial capacity of 1.2 billion cubic feet per day, expandable up to 1.8 billion cubic feet per day to accommodate additional discoveries.

Imperial is the lead manager of the project. Its partners include ConocoPhillips (COP), Royal Dutch Shell (RDSA), Exxon Mobil Corp. (XOM) and the Aboriginal Pipeline Group.

-By Edward Welsch, Dow Jones Newswires; 613-237-0669; edward.welsch@dowjones.com

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