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Yellowknife, N.W.T. - The Mackenzie Delta Producers Group and the Mackenzie Valley Aboriginal Pipeline Corporation (MVAPC) have announced their intent to begin preparing regulatory applications needed to develop onshore natural gas resources in the Mackenzie Delta, including a Mackenzie Valley Pipeline.

Since initiating a feasibility study into Mackenzie Delta gas development in early 2000, the Producers Group - Imperial Oil Resources, Conoco Canada, Shell Canada Limited and ExxonMobil Canada - has consulted with more than 100 parties, including Northern communities, governments and oil and gas companies. During the project definition phase, the public will continue to be consulted to ensure their input is represented and considered.

In October 2001, the Producers Group and the MVAPC, representing the Aboriginal peoples of the Northwest Territories, signed a memorandum of understanding to guide future work on economic and timely development of a Mackenzie Valley Pipeline. The memorandum was signed in the Aboriginal community of N'Dilo, near Yellowknife, N.W.T. The pipeline would be anchored by nearly six trillion cubic feet of natural gas at the Taglu, Parsons Lake and Niglintgak gas fields, and would be accessible to other existing and future natural gas discoveries in the Mackenzie Delta and Mackenzie Valley regions.

Today's announcement signals the producers' intent to move from the feasibility study phase to the project definition phase. This phase includes technical, environmental, consultation and commercial work required to prepare, file and support regulatory applications for field, gas-gathering and pipeline facilities. Work will also begin to develop benefit plans, access agreements and other arrangements in support of the applications.

"Announcing our intent to proceed with the project definition phase demonstrates the confidence of the Producers Group and the MVAPC that development of Mackenzie Delta gas, including a Mackenzie Valley Pipeline, is potentially commercial and can be beneficial to the people of the North and to all resource developers," said K.C. Williams, senior vice-president, Imperial Oil, on behalf of the Producers Group. "The historic memorandum of understanding signed in October has the support of Aboriginal leaders who represent about three-quarters of the Aboriginal people of the Northwest Territories. We remain committed to continuing the dialogue with all Aboriginal leaders and communities, independent of whether they have ratified the memorandum of understanding. While we are optimistic, the ultimate decision to build the pipeline can only be made after obtaining regulatory approval, and will be a function of many factors, including natural gas markets, construction costs, and regulatory and fiscal certainty."

Nellie Cournoyea, chair of the MVAPC, said, "The decision by the MVAPC and the Producers Group to proceed with the preparation of regulatory applications is a significant step toward a Mackenzie Valley Pipeline. The business partnership negotiated with the producers allows all Aboriginal people of the North to participate in and benefit from this opportunity, including parties who have not yet indicated their support."

"We are very pleased with the progress made over the past year," added Henry Sykes, president of Conoco Canada. "Moving to the project definition phase is a significant milestone in the development of this opportunity. This is pioneering work and we're creating new ways of doing business including better ways of partnering with northern communities. We can now start preparing the regulatory applications needed for the development of the Parsons Lake gas discovery, which we operate on behalf of ourselves and ExxonMobil Canada."

Ray Woods, senior operating officer, Resources, Shell Canada Limited, said: "We are one step closer today to developing Mackenzie Delta natural gas resources, including Shell's Niglintgak discovery. We would like to recognize the efforts of the MVAPC in helping to build the broad-based support that was key to taking the decision to proceed with the project definition phase."

Expenditures required to complete the project definition phase, which includes the preparation and regulatory review of the applications, are estimated at about $200 million to $250 million (Cdn.). Timing is dependent on a number of factors, including the regulatory review process. As part of regulatory application preparation, an environmental impact assessment including plans for environmental protection and subsequent monitoring will be prepared.

As the holder of the natural gas rights at Taglu, the largest of the three discovered Mackenzie Delta gas fields, Imperial is the designated operator of the gas gathering and pipeline systems.

SOURCE: Imperial Oil Limited. The Mackenzie Delta producers are Imperial Oil, Conoco-Phillips Canada, Exxon-Mobil and Shell Canada. For further information contact Hart Searle, Public Affairs, Imperial Oil Limited, phone: 403-237-2710.