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Two partnerships bid C$183.2 million in Beaufort Sea bids Exploration licenses require drilling, expenditures equaling bid amount Petroleum News Alaska
Canada’s Northern Oil and Gas Directorate said Sept. 15 that more than C$183.2 million in work bids were received for the 1999 Beaufort Sea/Mackenzie Delta call for bids, which closed Sept. 9. The directorate manages oil and gas resources for Canada’s federal lands in the Northwest Territories, Nunavut and northern offshore.
Poco Petroleums Ltd. (50 percent) and Burlington Resources Inc. (50 percent) bid a work expenditure of C$35,550,000 for parcel No. 1. The same partnership bid C$42,375,000 for parcel No. 2.
Petro-Canada (60 percent) and Anderson Resources Ltd. (40 percent) bid C$51,848,860 for parcel No. 3. The same partnership bid C$53,444,900 for parcel No. 4.
Exploratory work bidding criterion The directorate said four new exploration licenses will be issued with effective dates of Sept. 18. Licenses will run until September 2008, subject to drilling commitments being met.
The directorate said the standard bidding criterion for recent rights issuance in the North has been the total amount of money that the bidder proposes to spend doing exploratory work on the parcel within a specified time period. The criterion is referred to as a work proposal.
Winning bidders receive exploration licenses for up to 9 years divided into two periods; work proposals bids relate to the first period and are secured by a deposit of 25 percent of the amount bid. The deposit is refundable as expenditures are made at the rate of one dollar for every four dollars spent. The licensee must drill a well in the first period.
The second period carries rental obligations, also refundable as expenditures are incurred.
Successful explorers apply to the National Energy Board for technical review and declaration of the extent of their discovery. Once the energy board declares that a significant discovery has been made, a discovery license is granted.
Discovery licenses have indefinite terms because some discoveries may not be immediately economic to produce. Once the developer determines that the discovery is commercial and wishes to begin production, it applies to the National Energy Board for a declaration of commercial discovery area. Once a development plan is approved, a 25-year production license can be issued, renewable as long as production continues.
In area of 53 discoveries In calling for bids, the directorate described this as an “opportunity for industry to bid on lands with high exploration potential close to major gas fields at Taglu and Niglintgak and several other gas and oil discoveries onshore the Mackenzie Delta.” The agency described the parcels as “strategically placed for future offshore oil and gas development in the Beaufort Sea.”
Discovered resources of the Mackenzie Delta region are currently estimated by Canada’s National Energy Board at 1.01 billion barrels of oil and 9 trillion cubic feet of gas. The Geological Survey of Canada places potential estimates of undiscovered resources at 5.39 billion barrels and 53.3 trillion cubic feet.
Parcels 1 to 3 adjoin or surround 12 existing onshore discoveries retained under significant discovery licenses. Earlier this year the National Energy Board published estimated mean discovered resources in those discoveries at 2.8 trillion cubic feet of gas and 70 million barrels of oil.
Parcel No. 4, the most southerly, lies in a relatively little drilled area of the southern Mackenzie Delta.
For more information visit the directorate on the Internet: http://www.inac.gc.ca/oilu
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