North America will need Arctic natgas - Exxon’s Imperial Oil

01 February 2011 19:23  [Source: ICIS news]

TORONTO (ICIS)--North America will need natural gas from the Arctic region in the long run, notwithstanding current relatively low gas prices, a senior executive at ExxonMobil’s Canadian affiliate said on Tuesday.

Paul Masschelin, Imperial Oil’s senior vice-president, finance and administration, told Canadian business television that in 20 years or so, North America would need both gas from the Arctic and unconventional gas.

Also, “on the margin, North America will continue to be an LNG importer”, he said when asked to justify his company’s plans for the multi-billion dollar Mackenzie Valley natural gas pipeline project from the Arctic sea amid currently low gas prices.

“What’s behind that [long-term gas demand] is that the price of CO2 [carbon dioxide] will increase as time progresses, and as such natural gas will become the primary energy source of choice for power generation,” Masschelin said.

But Masschelin added that Imperial and its partners still had a lot of work to do before construction could start.

Specifically, the project partners would seek fiscal framework agreement with the Canadian government to ensure “an adequate trade-off between risk and reward”, he said.

In December, Canada energy regulators approved the Mackenzie project, subject to a number of conditions. The project was first proposed in the 1970s.

Canadian analysts and commentators have said that with low North American natural gas prices in the wake of the US shale gas discoveries, Mackenzie was not likely to be built in the near future.

Canada’s chemical industry has been looking to ethane from the 1,200km (746-mile) pipeline and another planned pipeline project from Alaska, as a future source of feedstock for new petrochemical plants and expansions in Alberta province.

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By: Stefan Baumgarten
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