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Canada’s Far North close to breaking out of ‘quiet period’ Mackenzie Delta-Beaufort Sea operators immersed in weighing seismic data and risk-reward prospects; Chevron Canada expects two to four wells this winter Gary Park PNA Canadian Correspondent
Canada’s Far North is nearing the crossroads of moving from data-collection to drilling in pursuit of the great prize thought to be locked in the Mackenzie Delta and Beaufort Sea — up to 52 trillion cubic feet of potential marketable natural gas reserves.
Northern managers of Shell Canada Ltd. and Chevron Canada Resources, speaking Oct. 2 to the Far North Oil & Gas conference sponsored by Insight Information Co., outlined the next phase of their strategies for giving Canada’s Arctic a larger role in the North American supply picture.
The primary thrust is to start delivering on exploration commitments of about C$800 million made during the 1999-2001 period, with many of those leases due to expire in the next few years.
Ron Maier, Chevron’s northern gas program manager, said seismic activity is expected to taper off over the short term, while two to four wells are likely to be drilled in the Delta-Beaufort area in the 2002-03 winter.
Three fields — goal for Shell Marcel Hamonic, northern exploration manager with Shell Canada, said his company’s goal is to develop three Delta-Beaufort gas fields, build a regional gas gathering system and an 800-mile pipeline from Inuvik, Northwest Territories, to Alberta, with capacity of 800 million to 1.2 billion cubic feet per day.
He said Shell hopes to develop sufficient commercial volumes of Arctic gas to gain access to some of the initial space on a Mackenzie Valley pipeline.
But he cautioned against too much optimism, given the unfavorable winter operating conditions in 2000 and 2001 which narrowed the usual operational window of four to five months along with drilling costs, which can run to C$20 million per well.
Two years ago, the Canadian Gas Potential Committee identified the region’s prospects, estimating reserves at 21 to 52 trillion cubic feet, with five undiscovered fields each holding more than 1 trillion cubic feet and nine more ranging from 500 billion to 1 trillion cubic feet, the majority of them likely to be found in the offshore.
Shell Canada is a 17 percent partner in the Mackenzie Delta Producers Group along with Imperial Oil Ltd., ConocoPhillips Canada and ExxonMobil Canada. Although the consortium’s Delta reserves are estimated at 5.8 trillion cubic feet, the National Energy Board has issued export licenses for the Delta-Beaufort area of 9.2 trillion cubic feet, including 900 billion cubic feet to Shell.
Chevron: Companies in data assessment Chevron’s Maier said the latest round of exploration involves a significant shift from the 1970s and 1980s, when prospects were developed in shallower waters, based largely on two-dimensional seismic. Now three-dimensional seismic has greatly advanced knowledge of the area.
He said companies are now in a quiet period of data assessment as they ponder the reward and risk factors before settling on drilling programs. With deadlines on federal leases drawing closer he said there is likely to be a flurry of investment in 2004 and 2005.
For Chevron and other operators who have formed the Mackenzie Delta Explorers Group there is the added uncertainty, even if they make large-scale discoveries, of gaining access to a pipeline.
While Imperial has announced its desire to “fast-track” Delta approvals and start shipping gas by late 2007, the majority of exploration companies won’t be able to nominate significant volumes of gas before 2005, Maier said.
He issued a special plea for a Mackenzie Valley pipeline “that caters to the future of the region” and is not just a “one-shot wonder.”
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