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Canada’s Arctic developments continue apace
Gary Park, PNA Canadian contributing correspondent
Interest in Canada’s Arctic petroleum wealth is moving at a feverish pace, dominated by an agreement among four key natural gas players to study the commercial viability of tapping the Mackenzie Delta’s reserves within 10 years.
The decision rates as the biggest breakthrough in two years of northern developments and signals an end to a 20-year hiatus.
Following a string of gas discoveries and pipeline projects in the lower Northwest Territories, revived oil exploration in the central Mackenzie River Valley and an emerging battle for pipeline rights from the Delta and possibly Alaska’s North Slope, a fresh flurry of announcements dominated late February and early March.
In order of priority, they included:
• A deal by Imperial Oil, Gulf Canada Resources, Shell Canada and Mobil Oil Canada will explore market conditions, regulatory challenges and fiscal terms over the next year to assess their chances of delivering Arctic gas to market this decade. They will also hold discussions with the federal and Northwest Territories governments, producers and pipeline companies.
• Independent Calgary-based producer Alberta Energy Co.’s decision to trade Alberta heavy oil properties for a 75 percent stake of a 400,000 acre block in the Delta. The other 25 percent is held by Gulf Canada. Alberta Energy now hopes to join the four majors in their evaluation study.
“We are planning a pretty aggressive Arctic exploration program,” said Alberta Energy Chief Executive Officer Gwyn Morgan. “At this stage, it’s strictly wildcat acreage.” But the ultimate prize, he said, could be trillions of additional cubic feet of reserves.
• The Inuvialuit Regional Corp., one of Canada’s largest aboriginal landowners under the terms of a 1984 settlement, is inviting bids for six oil and gas blocks covering 1.2 million acres where the Mackenzie River enters the Beaufort Sea.
The corporation, representing 3,500 residents, has taken a lead role among 30 Native leaders who have just agreed to lift their 25-year opposition to oil and gas development. However, an Inuvialuit Regional Corp. spokeswoman said no exploration will be allowed on the land without guarantees of jobs and economic benefits and commitments to protect the environment and wildlife.
Now that senior producers, who have the economic might to make development happen, are involved in a feasibility study, the dramatic reversal of fortunes for the region can be taken seriously, said Jim Tanner, an analyst with the Canadian Energy Research Institute.
Cooperation covers only study But a spokesman for Imperial, the largest of the four resource holders, said the cooperation at this point covers only the study and is limited to the Delta, where the four companies have proven reserves of about 6 trillion cubic feet (He said the partners have no interest at this stage in adding the Beaufort Sea and Arctic islands where reserves are calculated at 70 trillion cubic feet).
“We decided to come together to examine the commercial feasibility,” he said. “If there is a desire to go forward, we will have to decide then how to go forward.”
Gulf Canada President Dick Auchinleck, a consistent advocate of early development of Arctic gas, described the study as a “big, big project” for his company. He said new technology, higher natural gas prices, growing U.S. demand and infrastructure development extending into the Northwest Territories all make development of Arctic reserves more attractive.
Peter Linder, an analyst with Harris Partners, said the Arctic is the “next frontier for major exploration” as opportunities shrink in Western Canada.
Bob Reid,TransCanada PipeLines vice-president of northern development, said a line down the Mackenzie Valley is economic, even at today’s gas prices. “Accessing frontier gas within a 10-year time frame is virtually essential if we are going to meet the demand forecast by the latter part of this decade,” he said.
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