NEWS BULLETIN

January 22, 2001 --- Vol. 7, No. 9January 2001

Canada abandons plans for Arctic lease sale; companies not interested because only lands now available are in higher-cost offshore areas

Canada's Northern Oil & Gas Directorate has drawn a blank in its efforts to attract interest from E&P companies in 250 million acres of the Mackenzie Delta, Beaufort Sea and western Arctic islands.

A call for nominations for a planned lease sale met with resounding silence when it closed Jan. 12 after six weeks. Bidding, which had been scheduled for February, will now be abandoned.

The region has reported 53 significant discoveries, with discovered reserves estimated at 24 trillion cubic feet and undiscovered resources at 145 trillion cubic feet. The bulk are in the lightly explored Arctic islands.

Mimi Fortier, director of the federal government agency, said the response “was not really a surprise,” given that the only lands now available are in higher-cost offshore areas.

Peter Linder, an analyst with Research Capital, agreed that the last available onshore Delta land was gobbled up last August in a C$466 million sale, when Anderson Exploration made C$352 million in work commitments, as sole bidder and in partnership with Petro-Canada.

He said there is a wide discrepancy between the costs of drilling onshore and offshore.

Fortier said the directorate will now turn its attention to a call for nominations in the Central Mackenzie Valley in the next month or two.

The directorate has also set a Jan. 29 deadline for nominations in the Sverdrup Basin of Nunavut, where proven reserves are estimated at 17.7 trillion cubic feet, with potential for 50 trillion cubic feet.

“We expect to see some interest in Nunavut because exploration rights have not been offered there in a long time,” she said.


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