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Canadian North awakens Interest from unidentified source results in call for bids on 11 parcels covering 3.2 million acres in 3 regions; objective unknown Gary Park For Petroleum News
Amid persistent gloom over the Mackenzie Gas Project, Canada’s North may be on the verge of springing back to life following a call for bids covering 3.2 million acres.
Based on industry nominations, Indian and Northern Affairs Canada has posted 11 parcels — one in the Beaufort Sea, two in the Mackenzie Delta and 11 in the Central Mackenzie Valley.
The offering, which closes June 21, is the boldest indication in recent years of interest in the Arctic region.
If the federal government cabinet signs off on National Energy Board approval of the MGP application, a decision now expected in March, that could further generate competitive bidding and renew hope that the MGP is far from moribund.
Consistently the strongest public advocate of eventual northern oil and gas development, Henry Sykes, chief executive officer of MGM Energy, told the Calgary Herald “it’s looking like the logjam is going to break.”
Without disclosing whether MGM intends to bid, he said it is clear that there is industry interest in securing rights, especially in the Central Mackenzie Valley, which is close to the Norman Wells oil field and existing underutilized Enbridge pipeline to northern Alberta.
On route of gas pipeline Sykes said the fact that postings follow the proposed route of the Mackenzie Valley gas pipeline raises questions about whether someone is planning to drill for oil or speculate on future value of the acreage.
International Frontier Resources has been a partner in nine of 14 wells drilled in the Central Mackenzie Valley over the past decade, resulting in two oil and gas finds and one sweet gas discovery, while six wells were plugged and abandoned.
IFR President Pat Boswell said it appears somebody is trying to round up the entire land area west of the Mackenzie River and south of Norman Wells.
His own company said last September that the current lack of transportation from the Central Mackenzie Valley gives IFR an opportunity to acquire land at a lower cost than would have been possible if a natural gas pipeline existed.
The company currently has interests in three significant discovery licenses, three exploration licenses and in three freehold parcels covering 735,000 gross acres.
In February update, IFR said evaluations by McDaniel & Associates Consultants assigned contingent resources to two SDLs — ranging from 8.9 billion cubic feet to 38 bcf of gas and 1.4 million barrels to 6 million barrels of oil at Summit Creek and 24 bcf-63 bcf of gas at Stewart Lake.
Bob Reid, president of the Aboriginal Pipeline Group, which has an option to take a one-third equity stake in a Mackenzie Valley pipeline, said signs of fresh interest in the Mackenzie Delta and Central Mackenzie Valley give a positive lift to the MGP.
In a statement Feb. 21, Sykes said MGM will continue to focus on exploration prospects in the Central Mackenzie Valley, undaunted by its announcement that a wildcat well in the Great Bear River area did not encounter commercial quantities of hydrocarbons and has been abandoned.
Disappointing results He said his Calgary-based company is disappointed with the result of the Windy Island J-39 well — which Devon Energy participated in for a 50 percent interest — despite knowing it was a “high risk wildcat exploration well.”
But “because it was an oil prospect close to (Enbridge’s Norman Wells pipeline) and a potentially large structure, it was important to drill the well,” he said.
For now, MGM has pulled back from its extensive exploration rights and significant discovery licenses in the Mackenzie Delta, although it is prepared to drill three appraisal or development wells within three years, if and when a decision is made to build a Mackenzie Valley pipeline.
Two months ago it gained some support from KOGAS Canada, a subsidiary of state-run Korea Gas Corp., which struck a deal to pay C$30 million for a 20 percent stake in MGM’s Umiak significant discovery license, which includes both a natural gas and oil discovery.
KOGAS is committed to paying C$20 million when the transaction closes and another C$10 million if a decision is made to build the Mackenzie Valley pipeline.
The deal involves the sale of 109 billion cubic feet of mean contingent plus prospective resources, leaving MGM with a base of 887 bcf.
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