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January 17, 2005 --- Vol. 11, No. 5January 2005

Central Mackenzie land sale launched

The Canadian government is turning its attention to the Central Mackenzie Valley in its latest attempt to attract oil and natural gas exploration interest in northern regions.

Indian Affairs and Northern Development Minister Andy Scott has invited bids for eight parcels covering 1.25 million acres. The land sale closes May 17. The exploration licenses are for eight years, with license holders required to drill a well during the initial four years to qualify for an extension.

The Central Mackenzie Valley generated a strong response last year, when four licenses covering 580,000 acres fetched C$63 million in work commitment bids ó one from a partnership with Northrock Resources as operator, two going to Paramount Resources and one to Petro-Canada.

Northrock and its partners had earlier been rumored to have made an oil discovery about 50 miles southeast of Norman Wells.

Scottís department said today it drew a blank on two earlier calls for nominations which closed Dec. 17 for the Beaufort Sea/Mackenzie Delta region and Dec. 23 for Nunavut Territory.

Nunavut is proving a tough sell because of its distance from existing infrastructure and the focus on gas exploration tied to the proposed Mackenzie Valley pipeline.

However, a fresh attempt is being made to stir interest in Canadaís last great resource frontier through a study into the economics of natural gas development on Nunavutís Melville Island.

A study presented this month by the Canadian Energy Research Institute to 50 industry and two Nunavut representatives noted that two discoveries in 1970 identified about 10 trillion cubic feet of gas.

But the economics of commercial development in the Far North have always been defeated by low gas prices until recent years.

Now, according to a Canadian Broadcasting Corp. report, CERI senior director George Eynon said the combination of demand and prices have made exploitation of the High Arctic more feasible.

Although a pipeline from Melville has been ruled out, CERIís study said four methods ó including compressed natural gas or gas-to-liquids shipments ó might be economical provided prices remain high.

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