UPDATE:Shell Seeks To Sell Stake In C$16 Billion MacKenzie Gas Project
July 15 2011 - 6:32PM
Dow Jones News
Royal Dutch Shell Plc (RDSA) said Friday it plans to sell its
stake in a long-stalled, C$16.2-billion natural-gas production and
pipeline project in Canada's far north, as well as its other assets
in the region.
The fate of the Mackenzie Gas Project, which envisions bringing
natural gas from fields bordering the Arctic Ocean to markets in
North America, has long been in doubt. But Shell's departure from
the project marks the surprise capitulation of one of the project's
oldest and biggest partners. Consortium members have weathered
years of regulatory review and roller-coasting gas prices, betting
that the region's gas trove would one day be economical.
Federal regulators in Canada approved the project last year, but
the project's other big partners, including ConocoPhillips (COP)
and Exxon Mobil Corp.-controlled Imperial Oil Ltd., hadn't yet
committed to build the project.
A Shell spokesman wouldn't provide details on Shell's decision
to sell its assets in Mackenzie including its 11.4% stake in the
project, other than to say that it was part of Shell's normal
review of its holdings.
"Shell still believes the project is important for Canada," the
spokesman said.
Preliminary work on the Mackenzie gas pipeline was suspended in
2007 as a regulatory process drug 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. New drilling technologies
unlocked fresh gas supplies across the U.S. and other parts of
Canada. Natural gas prices fell dramatically.
Imperial Oil, which holds a 34.4% stake and is leading the
project, declined to comment on Shell's decision. Imperial has said
it and the other partners won't be able to make a decision to
commit funds to building the pipeline until the end of 2013. If it
is built, the pipeline would ship up to 1.2 billion cubic feet of
gas a day.
In addition to Shell's stake in the pipeline project, which
would include an gathering system and processing facility, Shell's
Niglintgak natural gas field in the area will also be put up for
sale, the company said.
-By Edward Welsch, Dow Jones Newswires; 403-229-9095;
edward.welsch@dowjones.com
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