MGM Energy Corp MGMCF

Good rebuttal OilEng

[geodude13]

You're absolutely right about the TransCanada/Spectra tie-in and cost structure of pipeline tolls.

I overly-simplified the notion of routing and transportation toll structure. However, the point of incurring additional tolls for gas that can be purchased more cost effectively through gas marketing contracts verses routing MGM product through several differently owned gas transporter companies doesn't make much economic sense. The likely scenario is that the the Korean gas marketers trade the MGM gas and offset the cost of transportation tolls in a manner that best suits the Koreans.

One wildcard that nobody has raised on the Board is what were to happen to the Mackenzie Delta and Valley gas fields if the Denali pipeline project is fully sanctioned prior to the MVP project. TCPL and ExxonMobil benefit in both project scenarios and I would think that the Canadian regulatory and first nations issues are proportionally less complex for the Denali project.

I personally would like the MVP to get going as it best suits my portfolio assumptions but also more effectively benefits Canada as a whole. Denali would preferentially benefit American interests and delay the MVP further as the North American gas supply would likely loosen gas pricing. It could also factor into the Kitimat LNG terminal source-gas too.

I don't want to "fearmonger" the issue but one should pay suitable attention to other gas development scenarios that may affect the economic viability MGM and MV gasfields.



Regards