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Arctic stirs: Canada sets funding; Conoco updates feasibility study
The largest oil and natural gas field in the Canadian Beaufort and the Mackenzie Gas Project are quietly being stirred back to life.
By late 2014, ConocoPhillips Canada expects to complete a three-year study to update the feasibility of developing the Amauligak field, which has estimated recoverable resources of 360 million barrels of oil and 2.3 trillion cubic feet of gas.
Separately, the Canadian government has quietly started dusting off a long-standing pledge to provide C$500 million in government funding over 10 years to soften the socio-economic impacts of the MGP.
The fund, after remaining dormant since 2006, has been slipped into an omnibus budget implementation act to ensure the money is available if and when it is needed.
Federal Environment Minister Leona Aglukkaq told the Canadian Broadcasting Corp. that the administration of Prime Minister Stephen Harper is “committed to fostering a strong, prosperous and dynamic northern economy.”
Harper’s government had made development of northern resources a priority since it was elected in 2006 and is on the verge of accelerating that prospect when it transfers control over resource projects to the Northwest Territories early in 2014.
Aglukkaq, who is responsible for the newly created Canadian Northern Economic Development Agency, said the objective is to start delivering the C$500 million on behalf of northern communities.
LNG export application A partnership of MGP operator Imperial Oil and its 70 percent owner ExxonMobil have applied for an LNG export permit, drawing on gas from fields they own in Canada, including the Mackenzie Delta fields which underpin the MGP.
Imperial spokesman Pius Rolheiser told the CBC that strategic options for Mackenzie Delta gas could potentially include a role in an LNG project.
“But, at this point, we are in the early stages and we have not made any decisions,” he said.
Rolheiser reiterated Imperial’s constant refrain that it has made a significant investment in the MGP and building relationships with northern aboriginal communities and does not want to squander what it has spent on a “terribly important asset.”
Also serving as a prod for Arctic gas is a requirement for Imperial to report to the National Energy Board before the end of 2013 on whether or not is plans to build an MGP pipeline and update the most recent cost estimates for the project of C$16.2 billion. Some observers believe that forecast is now much closer to C$20 billion.
NWT hearing renewed interest NWT Industry Minister David Ramsay told the CBC his government has heard there is renewed interest among MGP proponents — Imperial, ExxonMobil, ConocoPhillips, Shell Canada and the Aboriginal Pipeline Group — in getting northern gas to market, but added he has not yet heard anything official.
The Beaufort reawakening has been prodded by melting sea ice, which could make tanker shipments through the Northwest Passage more feasible.
Conoco close to decision ConocoPhillips is close to a decision on preparing a design concept to drill wells and develop the Amauligak field, which is about 30 miles from the last landfall in the NWT in about 100 feet of water, and was discovered in 1983 by Gulf Canada, before a series of takeovers and mergers.
As operator, ConocoPhillips has a 55 percent working interest, with Chevron holding 40 percent and ATCO Oil and Gas 5 percent.
Sheila Reader, the company’s vice president for the Canadian Arctic, said at a Calgary conference Oct. 24 that the current work involves regulations, subsurface conditions, environment, stakeholder interests and potential development concepts.
She said significant hydrocarbon resource potential in the Canadian Arctic is rated at 19 billion barrels of crude, 1,700 tcf of gas and 44 billion barrels of natural gas liquids, but said the shale gas revolution could raise those numbers.
Not completely idle Although there had been a hiatus in exploration of Canada’s North, the region has not been completely idle.
In 2007, Devon Canada reported the first Canadian Beaufort find in 25 years, estimating recoverable resources at its Paktoa C-60 well at 240 million barrels of oil in 43 feet of water — a surprise given that it was targeting natural gas.
The same year saw Imperial and ExxonMobil team up to spend C$585 million acquiring access to a parcel covering about 507,000 acres, then BP made a record C$1.18 billion work commitment in 2008 to secure an adjacent 500,000-acre parcel. The three companies have since formed a joint venture.
Husky Energy, Shell and MGM Energy have all been involved in successful bidding for Beaufort leases.
Chevron said it needs another two or three years to complete evaluations of a drilling plan for its Sirluaq lease in the Beaufort, where it gathered seismic data over about 2,372 square miles last year in a 60/40 joint venture with Statoil.
—Gary Park
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