Industry needs all the help it can get to fulfill visions of a northern energy mother lode that the Canol Shale exploration campaign is reviving, said a geologist.
With the memory of the Mackenzie Gas Project's death by delay still fresh, industry hopes Canada's federal and Northwest Territories (NWT) governments will keep a promise in their new deal on resource ownership and regulation.
The pledge says, "For industry this means working with a nimble, accountable and responsible government." NWT officials delivered the commitment to the Canadian oil and gas headquarters city of Calgary after Prime Minister Stephen Harper signed the agreement this week in the territorial capital, Yellowknife.
The "devolution" package transfers government-owned oil, gas and other minerals in the NWT to territorial from federal authorities, giving the 1.3-million-square-kilometer (500,000-square-mile) Canadian province-like jurisdiction.
As Harper announced the deal in the NWT legislature, the busiest Canadian arctic drilling season in memory was under way farther north near Norman Wells. The rigs probed for oil that horizontal wells and hydraulic fracturing could produce from a mammoth shale formation known as the Canol, which lies at varying depths and is often more than 100 meters (328 feet) thick beneath vast expanses of road-less forest and muskeg swamps in the central Mackenzie Valley.
Participants in the exploration campaign include two of four corporate partners in the C$16-billion Mackenzie natural gas production and pipeline proposal, Shell Canada and ConocoPhillips Canada.
A six-year regulatory hearings ordeal, required by an environmental and socioeconomic joint review panel representing a dozen federal and territorial agencies, froze the gas scheme for six years after development applications were filed in fall 2004.
The National Energy Board (NEB) granted approval to Canada's arctic pipeline at the end of 2010 after setting aside most of a book-length wish list of conditions proposed by the joint panel. But the regulatory support came two years too late to save the project from being rendered uneconomic by the gas glut and price slump that shale supply development in the United States spread across North American gas markets.
The northern new deal's priorities include regulatory efficiency and building an all-weather highway as a year-round economic main artery through the Mackenzie Valley, NWT devolution director Shaleen Woodward told a business conference that CI Energy Group held in Calgary after Harper's announcement in Yellowknife.
Industry needs all the help it can get to fulfill visions of a northern energy mother lode that the Canol exploration campaign is reviving, said prominent Canadian geologist Brad Hayes, president of Petrel Robertson Consulting Ltd.
After doing four studies of northern shale potential for government and industry use, Hayes rates the NWT target as ranking with rich U.S. deposits such as the Texas birthplace of the new production technology.
"In terms of resource potential it [the Canol] compares quite favorably with the Barnett," Hayes said. The arctic shale target is believed to be an oil-saturated but mostly impermeable "source rock" for the Norman Wells field, a conventional geological "trap" of sponge-like sedimentary geology that contained more than 300 million barrels when it was discovered in 1920, filled a northern pipeline with fuel for the U.S. military's Alaskan operations in the Second World War and has pumped up to 35,000 bbl daily into a line to Alberta since the early 1980s.
"What's needed is a co-operative effort among the companies, regulators, and communities," Hayes said. "Technically, the resource is there. What's needed to get it out is to get everyone working together. It's not going to happen unless there's co-operation among everyone involved."
The magic ingredient of northern consensus on setting development as a goal and creating a practical regulatory regime of timely approval remains elusive, despite the signatures of Harper and NWT Premier Bob McLeod on the resource transfer deal.
Further agreements on details have to be nailed down before the resource transfer is implemented. Although talks on the new deal date back to 2001 and a target of April 2014 has been set for finishing the process, the last leg of the obstacle course includes a notoriously high NWT hurdle: securing full native consent.
About 55% of the territorial population is Inuvialuit (western arctic Eskimo), Indian (primarily Dene), and Metis (descendants of intermarriage with explorers and fur traders).
The resource transfer has been endorsed by five of the seven main aboriginal communities but the holdouts include the biggest one: the Deh Cho, who occupy the southern 40% of the NWT, have yet to complete a land claim settlement with the federal government, and contributed to the Mackenzie gas scheme's demise by rejecting native part-ownership offered by the corporate sponsors while also at times vigorously resisting the project's regulatory review.
At the same time as territorial and federal officials held out hope of easier access to northern resources, they also vowed to comply with requirements to consult with natives that are enshrined in the Canadian constitution and high court precedents.