July 2 – 8, 2012 Vol. 29, No. 27
Royal Dutch Shell has put its stake in the C$16.2 billion ($16.8 billion) Mackenzie gas project up for sale, the first crack in the partnership set up to develop vast reserves in Canada’s Arctic and build a pipeline to take the gas south.
Shell is seeking bidders for its 950 billion cubic foot Niglintgak natural gas field in the Mackenzie River Delta, as well as its 11.4 per cent stake in the planned pipeline. The move adds yet more uncertainty to a project that many observers believe suffers from shaky economics.
Now several years behind its initial schedule, the Mackenzie project is under pressure because of high construction costs and questionable returns due to weak gas markets as the industry develops cheaper shale gas reserves across North America.
Still, Shell said the planned sale was part of its routine portfolio management and that it continues to have faith in the viability of the pipeline. “Shell still believes the project is important for Canada,” said Stephen Doolan, a spokesman for the company.
Imperial Oil, the lead partner in the five-member consortium that has backed the project for more than a decade, still plans to go ahead with the line, its chief executive said. “We’re still committed to try to make this project go forward,” Bruce March told Reuters. “We’re just pleased that (Shell) is getting started with the marketing effort.”