UPDATE 1-Imperial Oil CEO "dismayed" by Mackenzie reports

By Jeffrey Jones CALGARY, Alberta, Nov 3 (Reuters) - Ottawa has said nothing to sway Imperial Oil Ltd from plans for the Mackenzie Valley gas pipeline, despite a media report that appeared to cast the C$16.2 billion ($15.1 billion) project into more doubt, Imperial's chief executive said on Tuesday. Imperial, lead partner in the Arctic pipeline proposal, is proceeding with the groundwork and waiting for a crucial regulatory report due next month, CEO Bruce March said. Meanwhile, the Canadian government, which has been weighing a package of measures to improve the economics of the massive project, must conduct its analysis in private, he added. "I was really dismayed to see the coverage that came out of that, when in fact we'd been told that nothing's different in terms of working with the government on the things that we've been working on," March told reporters at ceremony to mark Imperial's donation of a mothballed corporate jet to Southern Alberta Institute of Technology's avionics program. "We're still trying to achieve a fiscal framework along the lines that the government's laid out, we're still trying to progress and finish aboriginal access agreements, we're still waiting for the Joint Review Panel and those findings." Last week, the National Post newspaper said a cabinet committee had rejected a fiscal package proposed by Environment Minister Jim Prentice, Prime Minister Stephen Harper's point man on the Mackenzie project. Prentice's comment since have not cleared up the uncertainty -- he has said it is a private-sector venture that must stand on its own economic merits. The project, whose other partners are Royal Dutch Shell , ConocoPhillips, Exxon Mobil Corp and Aboriginal Pipeline Group, would extend 1,220 km (760 miles) through the Northwest Territories, tapping gas fields under the Mackenzie River Delta in the Arctic. It is seen as a key to much-needed economic development in Canada's sparsely populated North and a catalyst to more exploration in the Beaufort Sea and other Arctic locales. But the line, which would move as much as 1.9 billion cubic feet of gas a day, has been beset by delays and cost hikes. The possibility of developing massive shale gas deposits in Texas, Pennsylvania and elsewhere, has added more uncertainty to the proposal, which was first discussed in the 1970s. March said he believes the gas will be needed. "(Gas is) going to play an absolutely critical (and) a significant role in the world meeting all climate change goals, not only just in North America but around the world," he said. "So we take a long-term approach and view. In North America we see natural gas demand going up some 40 percent in the next 25 years." SYNCRUDE STAKE March also said Imperial will look at ConocoPhillips' 9 percent stake in the Syncrude Canada Ltd oil sands venture when to goes up for sale "like we look at everything else," but declined to say if a deal was likely. Conoco said last week it will sell the interest in the world's largest oil sands operation, a stake that some analysts have valued at around C$3.6 billion. Imperial has a 25 percent stake in Syncrude, making it the second-largest interest holder after Canadian Oil Sands Trust , another potential bidder.

"We're really happy with our equity interest in Syncrude today," March said. ($1=$1.07 Canadian) (Reporting by Jeffrey Jones; editing by Janet Guttsman) Keywords: IMPERIALOIL/MARCH ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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