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Devon Canada puts Yukon on back burner Largest holder of Eagle Plains exploration rights puts focus on Mackenzie Delta; wants to spend dollars in areas which have the earliest prospects of coming on stream Gary Park PNA Canadian Correspondent
Signs of an exploration slowdown in the Canadian Arctic this winter have been reinforced by Devon Canada Corp., which is taking a break from work on its oil and natural gas leases in the Eagle Plains area of north-central Yukon.
Michel Scott, Devon Canada’s vice president, frontiers, told the Whitehorse Star Nov.20 that the company has several years remaining to complete C$23.3 million of work commitments on three Eagle Plains leases.
The leases were acquired as part of a C$5.3 billion takeover of Anderson Exploration Ltd. in 2001, making Devon the largest landholder in Eagle Plains, part of a region where reserves of 500 billion cubic feet of gas and 10 million barrels of oil have already been identified, but where geologists have put the potential at closer to 6 trillion cubic feet of gas.
Rights expire in 2005 and 2007 The exploration rights, acquired in 1999 and 2001, expire in 2005 and 2007. About C$6 million of the commitment was spent on three properties in the 2000-01 drilling season.
But Devon Canada has opted to focus its attentions on the Mackenzie Delta, following up its Tuk M-18 discovery earlier this year in partnership with Petro-Canada.
An offset well is scheduled for January to determine the full scope of the discovery, tentatively rated at 300 billion cubic feet.
With the prospect of a pipeline from the Delta by 2007 or 2008, Scott said Devon wants to spend its “big dollars” drilling properties that are closer to production than Eagle Plains.
Although Scott emphasized that Devon has no intention of simply walking away from its sizeable investment in the Yukon, the absence of any firm plans is troubling for the newly elected Yukon government’s hopes of attracting resource investment.
Yukon government has high hopes Premier Dennis Fentie, who met with industry leaders in Calgary Dec. 3 to promote the opportunities in the Yukon, said he has high hopes for Eagle Plains and is equally optimistic about the southeast corner of the territory where gas fields could be easily linked to existing infrastructure from the Northwest Territories’ Fort Liard field.
To deal with one of the industry’s overriding concerns, Fentie has given priority to settling the remaining unresolved aboriginal land claims and, failing that, to at least establish economic partnerships with the First Nations.
In addition, management of the Yukon’s natural resources is passed from the federal tom the territorial government next year, simplifying the regulatory processes and offering greater “investment certainty,” Fentie said.
Seismic on hold in Yukon But the postponement of Yukon activity adds to some troubling signs in the Northwest Territories, where industry sources have told PNA that further seismic programs are on hold while some companies are close to scaling back their operations.
The most negative signal yet came from London-based seismic joint venture WesternGeco — owned 70 percent by Schlumberger Ltd. and 30 percent by Baker Hughes Inc. — which is closing down land operations in the Lower 48 and Canada, although continuing in Alaska, Mexico and other global areas.
WesternGeco has been the major source of seismic jobs in the Delta over the last few years, but its pull-out is expected to see exploration spending in the Delta drop this winter below C$100 million, or less than one-third of last winter’s budget. That drop will be only fractionally offset by an increase in the Northwest Territories’ western region.
Hopes now hang on a decision early in 2003 by the Mackenzie Delta Producers Group to proceed with regulatory applications that could see gas flowing from the Delta inside five years.
Without that commitment, the future of about C$500 million in Delta work commitments, which expire along with the rights and security deposits in another two or three years, is in doubt.
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