Chevron Canada Limited and BP Canada Energy have entered into a farmout agreement with MGM Energy to test four distinct play types in this winter's exploratory drilling program in the Mackenzie Delta. The wells are subject to partner and regulatory approval and will cost an estimated $74 million. MGM would like to spud its first well before the end of December and complete each of the four wells prior to the end of the winter drilling season in April 2009.
Imperial Oil executives have recently become increasingly optimistic about the likelihood of the Mackenzie Gas Project due to increasing interest from the federal government over the last nine months. The project is a 1,220-kilometre natural gas pipeline that would run through the Mackenzie Valley in the Northwest Territories, connecting northern onshore gas fields with North American markets in the south. Imperial Oil's capital spending plan will range between $1.5 billion and $2 billion. Despite credit woes and dropping oil prices, the company does not foresee that it will have trouble accessing capital.