Hopes soar in Mackenzie

Consortium posts first find in Central Mackenzie Valley since 1920

Gary Park

Petroleum News Calgary Correspondent

A five-company consortium has come closer than anyone in 85 years to unlocking an oil and gas treasure trove in Canada’s Central Mackenzie Valley that has tempted explorers since Imperial found oil near Norman Wells in 1920.

Led by Unocal subsidiary Northrock Resources, the partnership has reported a significant discovery that has tested from each of two zones at 10 million cubic feet per day of gas and 3,000 barrels per day of light oil or condensate.

It could be the breakthrough to a working petroleum region after more than 30 exploration wells since 1940.

Winter testing of the Summit Creek B-44 wildcat well, which was suspended a year ago after reaching a depth of 10,053 feet, confirmed several productive intervals with a gross hydrocarbon column of more than 600 feet.

The flow rates against a one-inch choke produced flowing well head pressures of 900 to 1,100 pounds per square inch.

Spring thaw and operational problems have stalled testing of two additional wells in the B-44 program.

Northrock President David Pearce said in a statement March 30 that the winter results were “encouraging,” while Pat Boswell, president and chief executive officer of International Frontier Resources, a 5 percent partner, said a new petroleum play may have been discovered.

More work expected in 2005-06

However, Pearce and the Unocal spokesman cautioned that one of the two tested zones produced 1,000 bpd of water.

Pearce said that additional work is needed to establish the size of the reserve and take the next steps towards commercial production.

A second wildcat, Sah Cho L-71, was drilled to a depth of 12,050 feet during the winter season and although hydrocarbons were encountered, open hole testing did not yield commercial flow rates. The well has been cased to total depth and suspended.

But the disclosures so far give the biggest lift yet to those who believe the region should be rich in oil and gas, based on Imperial’s 1920 discovery of an estimated 660 million barrels of oil in place.

Since 1980 that oil has been carried through a 12-inch Enbridge pipeline extending 540 miles to northern Alberta.

But a 6 percent annual decline in production in recent years has seen volume shrink to under 24,000 bpd, about 10,000 bpd short of current capacity, and less than half the pipeline’s potential.

Hopes have been pinned on a second find near Norman Wells or a decision to proceed with the Mackenzie Gas Project.

Although gas from the Mackenzie Delta would be carried through a new pipeline to northern Alberta, 12,000-15,000 bpd of liquids would be transported in a new Enbridge system feeding into the Normal Wells pipeline.

Summit Creek gas requires gas pipeline

Northrock is operator and holds 32.5 percent of the B-44 and L-71 wells, which have involved spending of C$50 million on exploration, drilling and testing.

The five companies — Northrock, Husky Energy, EOG Resources Canada, Pacific Rodera and International Frontier — added 226,500 gross acres to their land holdings last year, making a C$24.8 million work commitment.

International Frontier was the first to gain a foothold in the area seven years ago when it acquired mineral rights covering 100,000 acres from the Tulita First Nation.

Others have also been drawn to the region in the last two years.

Junior explorer Devlan Exploration drilled one of the first summer wells in many years in 2004, completing the wildcat to a depth of 3,000 feet at a site 165 miles northwest of Norman Wells.

The well did not encounter commercial quantities of hydrocarbons, but the company was satisfied with its summer drilling performance and to establish a staging area for future operations.

EnCana completed an oil exploration well last year without releasing any results and Petro-Canada has committed C$22 million to explore 68,000 acres between Colville Lake and Norman Wells.