Industry cool to Canadian Arctic offerings; Mackenzie Delta/Beaufort call comes up empty handed

Gary Park, PNA Canadian correspondent

The reluctance by Canadian E&P companies to continue accumulating land inventories in Mackenzie Delta/Beaufort Sea region ahead of any firm decisions to build natural gas pipeline from the Arctic was reinforced in the latest government call for nominations.

Indian and Northern Affairs Canada announced that it got no responses to a call for nominations in the Delta/Beaufort that closed Jan. 7, or a second attempt to test the waters in Nunavut.

Results are now being awaited from a Central Mackenzie Valley call, where activity is hopping this winter.

But even there, the industry responses have shown a sharp decline in recent years.

In fall 2001, six parcels attracted five bids with work commitments of $4.35 million, or C$3.61 per acre, in itself a steep decline from two previous calls for bids.

In 2000, bids of C$57.47 million were made on six parcels covering 1.9 million acres at C$30.07 per acre, while bids in 1996 totaled C$35.15 million for 1.44 million acres at C$24.37 per acre.

Less surprising was the absence of nominations for the more remote Nunavut Territory — the second blank for that region in two years.

Most industry observers believe there is little interest in moving beyond the Mackenzie Delta and shallow Beaufort to regions that are technically challenging and far removed from any current plans for pipelines.

The Sverdrup Basin in Nunavut has estimated proven reserves of 17.7 trillion cubic feet and the National Energy Board has calculated potential reserves of up to 50 trillion cubic feet based on results from 120 wells drilled during the 1970s.

However, the Northern Oil and Gas Directorate has conceded that despite the riches of the region, E&P companies likely feel they are already fully committed in the Arctic.