Copyright 2001 Reuters
August 9, 2001
Story by Jeffrey Jones

CALGARY, Alberta - Conoco Inc. chief executive Archie Dunham pledged yesterday to tap into his top-level political connections to make sure vast natural gas reserves in Canada's far north are developed quickly and not overtaken by competing plans in Alaska.

Dunham, whose major oil company acquired a large Canadian Arctic position through its just-completed C$6.7 billion ($4.3 billion) takeover of Gulf Canada Resources, also said he aims to push ahead the timing of a pipeline along the Northwest Territories' Mackenzie River Valley by as much as two years.

However, Imperial Oil Ltd. , Conoco's partner in a major pipeline feasibility study, warned the process could not be rushed.

Hot debate among oil companies, U.S. and Canadian politicians and aboriginal groups has long centered on whether Mackenzie Delta gas or larger reserves on the Alaskan North Slope will flow to southern markets first, or if two multibillion-dollar pipelines could be built at the same time.

"With a portfolio this important to all kinds of economic issues in Canada, it's only logical that whatever route is chosen, it has to include Mackenzie Delta gas," Dunham told reporters in Calgary.

"I cannot imagine a politician in Canada agreeing to a pipeline that did not include Mackenzie Delta gas," he said before a ceremony with his 1,200 new employees to mark the close of the Gulf deal, the biggest-ever takeover in the Canadian oil and gas industry.

However, Dunham said he believed forces on both sides of the border would eventually compromise on an overall solution to end years of argument over pipeline routes and sources of gas, to the benefit of the United States and Canada.

Mackenzie Delta gas development is the No. 1 priority for the new Conoco Canada and its president Henry Sykes, a former Gulf executive, Dunham said.

FRIENDS IN HIGH PLACES

Dunham, a noted Republican Party supporter, has strong ties to the administration of U.S. President George W. Bush, and counts Vice-President Dick Cheney, a former oil man who is heading U.S. moves to develop a continental energy strategy, as a friend.

The Bush administration's free-trade policies would benefit Canadian Arctic gas development and its ability to feed thirsty U.S. markets via a pipeline extending into Alberta, which already exports huge volumes, he said.

He also said he had developed strong relationships with Canadian federal and provincial officials, as well as Alaska's governor and fellow native Oklahoman, Tony Knowles, who is a staunch supporter of Alaskan gas development.

Alaska and the U.S. House energy and commerce committee have recently made moves to prohibit any pipeline that does not follow the currently planned Alaska Highway route, which would extend into British Columbia and Alberta via the Yukon, effectively barring the "over-the-top" route under the Beaufort Sea to the Mackenzie Delta.

"I think Governor Knowles is a very pragmatic, tremendous governor, (and) interested in working out the details so we can do what's right for all the people and all the interested parties," he said.

As part of its Gulf takeover, Conoco won the sizable northern reserves and a stake in a high-profile working group led by Imperial studying a Mackenzie Valley pipeline. The group also includes Exxon Mobil Corp. and Shell Canada Ltd. .

A deal giving region's aboriginal people an ownership stake in the line has recently stalled amid concerns among some native groups over benefits that would flow to their people.

However, Conoco, which unlike Exxon Mobil has no gas reserves in Alaska, wants to speed up the process so a pipeline could be built in four to six years, as opposed to the currently estimated five to eight years, he said.

"We're a large global company, we have excellent relationships with the other producers, the governments, and we're going to use that influence to greatly accelerate the timetable on that project," Dunham said.

A spokesman with Imperial said the working group welcomed Dunham's "energy and enthusiasm," but cautioned that native, socioeconomic and environmental issues could not be rushed.

"Essentially, this has never been done before and I think we need to recognize you need to move forward at a measured pace, and I think we're moving forward as quickly and aggressively as we need to," Imperial's Pius Rolheiser said.

Conoco shares closed up 1 cent at $29.79 on the New York Stock Exchange yesterday. Error: Unable to read footer file.