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Canada Arctic exploration hiatus ends Natural gas exploratory well, new joint venture in Mackenzie Delta, calls for nominations in Northwest Territories and Nunavut show revived interest Gary Park PNA Canadian Correspondent
The pace is quickening in Canada's Arctic as all signs point to the first serious exploration activity in the Mackenzie Delta/Beaufort Sea region after a decade-long hiatus.
In a flurry of pre-Christmas announcements, Petro-Canada announced plans for a natural gas exploratory well; three leading players formed a joint venture to explore the Mackenzie Delta; and calls for nominations were invited for vast tracts of the Northwest Territories and Nunavut.
Petro-Canada, with Anderson Exploration as its 40 percent partner, had planned to spud the Kurk L-15 onshore well on February 1, but unusually warm weather has delayed drilling until at least mid-February. The C$44.3 million hole will be drilled to a depth of 2,800 meters about 100 miles northwest of Inuvik.
It will also be the first outing for a purpose-built Arctic rig owned by Calgary-based Akita Drilling and native-owned Inuvialuit Development Corp.
Petro-Canada and Anderson acquired the property in 1999 when they paid C$105.3 million for the rights near known gas discoveries, such as Titalik and Biglingtak.
Akita's new C$13.5 million rig has a specially winterized drill floor and heated workshops and is able to drill to a depth of 5,000 meters. New joint venture formed Also setting the stage for development of Arctic gas resources, Chevron Canada Resources, BP Canada Energy and Burlington Resources Canada have committed in excess of C$200 million to a joint venture which will shoot seismic and drill an undetermined number of exploratory wells on the Mackenzie Delta by 2003.
Chevron spokesman Charlie Stewart said the deals give each player greater access to land, capital and technical expertise.
"We can dramatically increase our opportunities over a larger geographical area while at the same time lowering risk and maximizing success potential," he said. "It's a good win-win for all the companies involved."
The first agreement gives BP the right to gain an interest in Chevron's 470,000 acres acquired at the Inuvialuit Regional Corp.'s competitive land sale in April 2000 for C$43 million in cash and work commitments.
The obligations include six exploration wells during the initial 10-year term, with the wells expected to cost C$20 million to C$40 million, depending on location. The Inuvialuit Regional Corp. can exercise an option to take a 25 percent working interest in any discovery.
Under the second agreement, Chevron and BP will each acquire a one-third interest in about 360,000 acres acquired by Burlington at a Beaufort Sea/Mackenzie Delta federal land sale in 1999.
The lands have work commitments of seismic and wells totaling C$78 million over the initial five-year term.
The new pacts extend the companies' existing partnership on a 182,000-acre parcel acquired in August 2000 for a C$77 million commitment on seismic and wells over the initial five years.
The trio said the partnerships were established to build a "significant production and reserve position" to meet the growing demand for new gas supplies in North America. Seismic, drilling programs planned Chevron has applied for regulatory approval to conduct a 3-D seismic program this winter, while Burlington will operate a 2-D program. BP will be the operator of the first well, due to be spudded next winter. Chevron is expected to lead 3-D programs in 2002 and drilling in 2002-03.
Stewart said the partners have also been in contact with Imperial Oil, Shell Canada and Gulf Canada, which have formed a study group to determine the feasibility of a Mackenzie Valley pipeline and expect to decide early this year whether to seek regulatory approval.
But he said the Chevron-BP-Burlington partnership has not expressed a preference for either the Mackenzie Valley pipeline route or the Alaska Highway proposal.
However, BP Canada is anxious to play a "pivotal" role in moving Arctic gas south, pledging to spend heavily on exploration over the next few years under the leadership of company president Tim Holt.
Chevron Canada president Jim Simpson said the Mackenzie Delta is a "major component" of his company's North American growth portfolio and a natural extension of its exploration success in the Fort Liard area of the lower Northwest Territories (where production is close to 120 million cubic feet per day), along with Chevron positions in Alaska and the Yukon. Two acreage opportunities offered On the nomination front, the Northern Oil and Gas Directorate has invited the industry to select exploration acreage over 400,000 square miles in the Mackenzie Delta, Beaufort Sea and western Arctic islands, while Nunavut has issued its first call for nominations for crude oil and natural gas exploration rights.
Depending on the response, the directorate may issue a call for bids in the Mackenzie-Beaufort region in February, where 53 discoveries have been made and the potential is highly rated.
Over 20 years, discovered reserves have been estimated at 1.4 billion barrels of oil and 12.7 trillion cubic feet of gas, but the Geological Survey of Canada has projected gas reserves alone could reach 61 trillion cubic feet.
Nunavut's first call since becoming Canada's newest territory almost two years ago covers the Sverdup Basin, where 19 discoveries were made between 1969 and 1985, including a gas field at Drake Point and the Bent Horn oil field, which delivered about 1.5 million barrels a year of crude to a Montreal refinery over 11 years.
The directorate said drilling success in the basin has averaged one discovery for every six wells drilled. It said there is "high potential" for further discoveries of oil and gas offshore and onshore.
The National Energy Board said discovered oil and gas in the Arctic islands represents 5 percent and 15 percent respectively of the remaining discovered recoverable reserves in Canada. Recent estimates suggest those resources could be raised to 10 percent for oil and 23 percent for gas.
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