NWT tests industry’s interest in Far North

The Canadian government is taking a long-range view of its northern exploration prospects, shrugging off a current lull in activity by inviting bids on offshore and onshore parcels in two regions of the Northwest Territories.

The Northern Oil and Gas Directorate of the federal Department of Indian Affairs and Northern Development is in the midst of handling bids for four parcels covering 770,000 acres in the Central Mackenzie Valley and three mostly offshore parcels covering 1.03 million acres in the Mackenzie Delta/Beaufort Sea.

It represents a test of the industry’s view of Canada’s North at a time when the proposed Mackenzie Gas Project is struggling to remain on track.

In addition, the directorate expects to issue a call for bids from oil companies for parcels to be offered in the Fort Liard region of the lower NWT, although those tracts have yet to be finalized.

Nine Fort Liard parcels were offered for bids last year, but drew a blank because the design was likely too restrictive.

The directorate hopes modifications to the design will draw a more vigorous response.

The agency estimates the NWT has recoverable natural gas resources of 82 trillion cubic feet and 6 billion barrels of oil.

The bid selection criterion is the total amount of money the successful company proposes to spend doing exploratory work during the first four years of the eight-year license. A deposit of 25 percent of the bid amount must be submitted with the bid.

So long as a well is drilled in the first four years, the license holder qualifies for a second period, whether or not the total amount of the bid has been spent.

A drilling deposit of C$1 million may be submitted before the end of the first period to obtain a one-year period of grace to commence the required well. That deposit is refundable once the well is drilled.

Results of the latest bidding rounds should be known soon, the directorate has indicated.

—Gary Park