Exploration companies have given a resounding vote of confidence to the Central Mackenzie Valley, with one of the most successful land sales in recent years, despite uncertainty over the proposed Mackenzie Valley gas pipeline.
The Northern Oil and Gas Directorate has awarded seven exploration licenses carrying work commitments of C$58.1 million, of which successful bidders have covered 25 percent with deposits.
The response reflects building interest in the Northwest Territories’ play, where drilling for oil and gas has been gathering momentum in the last two years.
The region got a fresh boost in March when operator Northrock Resources (a subsidiary of Unocal), Husky Energy, EOG Resources Canada, Pacific Rodera Energy and International Frontier Resources posted the Central Mackenzie’s first oil find in 75 years.
Winter testing of the partnership’s Summit Creek B-44 well yielded combined flow rates from two intervals of 20 million cubic feet of gas per day and 6,000 barrels per day of condensate.
Further work will be needed to assess the play’s commercial viability, but the discovery was the breakthrough the industry has been hoping for in an area that has tantalized explorers since Imperial Oil found the 660 million barrel Norman Wells field in 1920.
EnCana completed an oil exploration well last year, but is not required to disclose the results until early 2006 and Petro-Canada has committed C$22 million to explore 68,000 acres between Colville Lake and Norman Wells.
Stirring further interest, the 2004 Central Mackenzie auction saw a joint partnership of Chevron Canada Resources and BP Canada Energy bid almost C$62 million for a parcel covering 138,000 acres.
Topping this year’s list was a successful bid of C$32.1 million by Petro-Canada for a parcel covering 217,000 acres.
Next was a C$12.5 million bid by BG Canada Exploration, 75 percent, and International Frontier, 25 percent, for 205,000 acres.
Other winning bids were made by: BG Canada, 75 percent, and International Frontier, 25 percent, who paid C$4 million for 158,000 acres; Paramount Resources and Apache Canada, each holding 50 percent, bidding C$3.5 million for 127,000 acres and C$3.2 million for a parcel covering 200,000 acres; and Petro-Canada’s C$2.8 million bid for 194,000 acres.