April 23, 2002 --- Vol. 8, No. 44April 2002

Devon, Petro-Canada boost Canada's Arctic hopes with Delta gas find

Devon Energy Corp. and Petro-Canada have reported the first gas discovery in the Mackenzie Delta in more than two decades.

The Devon-operated partnership announced April 22 that it has made the breakthrough after drilling four exploratory wells in the past two winters.

The two companies said the Tuk M-18 well, about 15 miles south of Tuktoyaktuk, was drilled to 9,850 feet and was tested at restricted rates up to 30 million cubic feet per day. Estimated recoverable reserves have been rated at 200 billion to 300 billion cubic feet, with projected sustained deliverability of 60 million to 80 million cubic feet per day.

"This well firmly establishes Devon and Petro-Canada as legitimate Mackenzie Delta producers with proven reserves," said Devon Canada President John Richels. He said drilling and completions were conducted ahead of schedule and under budget "using technologies that were not previously available."

The partners are now working on drilling and exploration plans for next winter on their 1 million acres of leases, with the eventual objective of securing pipeline space "when Mackenzie Delta gas is eventually tied into North American markets."

Of the other three wells, the partnership reported that the Tuk B-02 encountered hydrocarbons before being abandoned and Kugpik L-46 was also unsuccessful. The Kurk M-15 well in the 2000-01 winter made gas shows, but "not in commercially viable quantities."

Devon and Petro-Canada are among several leaseholders on the Delta who operate separately from the Mackenzie Delta Producers Group Imperial Oil Ltd., Shell Canada Ltd., Conoco Canada Inc. and ExxonMobil Canada which has 5.8 trillion cubic feet of proven reserves and is the lead hope for Delta development this decade.

But the Mackenzie Valley Aboriginal Pipeline Corp. is seeking supplies of up to 500 million cubic feet per day from producers outside the Delta group to lock up a one-third Native equity in any pipeline along the Mackenzie Valley.

In addition to Devon and Petro-Canada, a partnership of Chevron Canada Resources, BP Canada Energy Co. and Burlington Resources Canada Energy Ltd., has signaled its intention to drill exploration wells next winter without yet announcing the details.

Other exploration and discovery license holders in the Delta, where total drilling commitments stand at about C$650 million, are EnCana Corp., Anadarko Petroleum Corp, Canadian Natural Resources Ltd., Canadian Forest Oil Ltd., Murphy Oil Ltd., Paramount Resources Ltd. and Suncor Energy Inc.

Editor's note: Petro-Canada (Alaska) Inc. took 56 tracts in Alaska's North Slope Foothills Areawide lease sale in May 2001, but does not appear on the state's leaseholder list as leases for the tracts have not yet been issued.

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