Shell Seeks To Sell Stake In C$16 Billion MacKenzie Gas Pipeline Project

Royal Dutch Shell PLC (RDSA, RDSB, RDSA.LN, RDSB.LN) said Friday it plans to sell its stake in a C$16.2-billion Northwest Territories natural-gas pipeline project, as well as its other assets in a vast natural-gas basin in the territory.

The fate of the MacKenzie Gas Project, which would bring natural gas from fields bordering the Arctic Ocean to markets in North America, has long been in doubt. Regulators approved the project last year, but other partners including ConocoPhillips (COP) and Imperial Oil Ltd. (IMO, IMO.T), controlled by Exxon Mobil Corp. (XOM), haven't committed to build it.

A Shell spokesman wouldn't provide details on the company's decision to sell its assets in MacKenzie, other than that it was part of Shell's normal review of its holdings. "Shell still believes the project is important for Canada," the spokesman said.

Work on the MacKenzie gas pipeline was suspended in 2007 after a regulatory process dragged on. It was finally approved by regulators late last year, after a six-year review process.

But during that review, the economic rationale for bringing natural gas from the far north eroded, as a surge in new shale gas supplies were being unlocked in the U.S. and other parts of Canada by new drilling technology.

In addition to its stake in the pipeline project, which would include a gathering system and processing facility, Shell's Niglintgak natural-gas field in the area will also be put up for sale.

The Shell spokesman said the company has prepared a package of data on its assets in the MacKenzie Delta and has made it available to potential buyers.

-By Edward Welsch, Dow Jones Newswires; 403-229-9095; edward.welsch@dowjones.com

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