Yukon sets new E&P, pipeline objectives

Canadian territory explores market connections through Alaska, Mackenzie pipelines

Gary Park

Petroleum News Canadian Contributing Writer

The Yukon government is taking a multi-pronged approach to awakening industry interest in its oil and gas potential and ensuring that any gas discoveries will be connected to market, said Energy, Mines and Resources Minister Archie Lang.

To that end the territorial government is engaged in talks with gas producers, pipeline proponents and other governments to guarantee that Yukon’s interests are part of the planning for the Mackenzie and Alaska projects, he told the seventh annual Far North Oil and Gas Forum in Calgary Sept. 28.

“Access to both pipelines is key to getting the Yukon’s natural gas to market,” he said.

The Alaska pipeline is designed to cover 450 miles across the southern Yukon, while a spur line from northern Yukon could connect with a Mackenzie pipeline.

Lang said his government has urged the National Energy Board to adopt a pipeline extension policy encouraging the development and connection of gas supply from basins adjoining the pipelines along with establishing a tolling system making it attractive to ship Yukon gas to market.

He said it is also important that the Yukon have access to gas from the pipelines for residential and commercial uses to displace diesel in power generation and heating.

Bolstering the Yukon’s appeal, the Yukon Geological Survey and Geological Survey of Canada revised and updated the resource assessments of the Eagle Plain and Peel Plateau regions of the northern Yukon.

The new assessment estimates petroleum plays in the area could push reserves past 6 trillion cubic feet of gas and 435 million barrels of oil. To date, exploration has identified 83.7 billion cubic feet of gas and 11 million barrels of oil.

Over 25 years only 73 wells have been drilled in the Yukon, including two this year by Devon Canada — one exploration well in Eagle Plain was abandoned and one development well at Kotaneelee in southern Yukon is producing 17 million cubic feet per day.

To make the Yukon an “attractive place to do oil and gas business,” Lang said the government will step up its efforts to promote significant unexplored resources, longer-term exploration rights and a competitive fiscal regime.

By introducing a new rights disposition system, he said companies will be able to request postings in an area of interest.

The first test of the new process will take place within a few months when the Yukon holds its fifth oil and natural gas disposition. The four earlier dispositions received work commitments of C$24 million.

Discussions are now taking place with First Nations and others to set a fall deadline for companies to submit posting requests, followed by a call for bids in winter 2006.

John Masterson, director of the Yukon’s oil and gas management branch, told the forum that the new procedures will reduce the time from requesting postings to the call for bids to 120 days from 300 days.

Progress is also being made in settling aboriginal land claims. So far settlements have been reached with 10 of 14 First Nations and an 11th agreement should take effect in January 2006.

But claims with two First Nations with land in the highly prospective Liard Plateau are still on the table, although they can consent to issuing oil and gas rights.