Ensign, Gwich'in to Serve Drillers Near Mackenzie Pipe Site

Anticipating the development of a natural gas pipeline in the Mackenzie Delta Valley to move supplies to the Lower 48, Ensign Resource Service Group Inc. and Gwich'in Development Corp. (GDC) have teamed up in a joint venture to provide drilling and oilfield services in the Northwest Territories. Ensign, based in Calgary, is Canada's second largest drilling firm, and has given GDC, an aboriginal company, a 51% stake in the deal establishing Gwich'in Ensign Oilfield Services Inc. (GEOS).

Selby Porter, Ensign's president, said GEOS services would begin on a "fairly modest" scale, with operations beginning this coming winter drilling season. GEOS will initially enter into oil and natural gas drilling contracts in the Gwich'in Settlement Area. Located within the Mackenzie Delta, the area encompasses 22,422 square kilometers of private land, and has been identified as one of the likely routes for the proposed Mackenzie pipeline.

Ensign has 146 rigs, second to Canada's leading driller, Precision Drilling, which has 226. Only one Ensign rig is expected to be deployed to the Arctic region this winter, but the number of rigs will grow "rapidly" if the proposed gas pipeline is approved. Porter said that Ensign will serve oil and gas companies in two ways: for those needing to do a certain amount of drilling to maintain their leases, and for those companies that need data on the reserves to justify a pipeline project. Providing data will be the company's initial purpose, Porter said.

GDC CEO Tom Connors said that with Gwich'in's 2,400 residents, many in need of jobs, "anyone with an able body" would have no trouble finding work. Ensign's Porter, who said his workforce was "tapped out," also plans to help train residents in the region for rig work. He said it would make more sense to train the regional workforce than to import workers from Newfoundland or Nova Scotia.

"The development of a local workforce and infrastructure is key to the continued development of the oil and natural gas resources of the Arctic region of Canada," Porter said, adding that Ensign was committed to GEOS' success and its "stated objective of providing training and employment to the Gwich'in people."

Although several pipeline proposals have been batted around for several years, two have gathered most of the media attention and appear to be competing for first approval rights. The North Slope pipe proposal includes a route that would travel the Trans-Alaska Highway, down through the Yukon and into British Columbia and Alberta, with interconnects to the Lower 48. Another route under study would primarily travel south from the Mackenzie Delta into the Northwest Territories and eventually into Alberta.

A pipeline from the North Slope under the Beaufort Sea to connect with the Mackenzie Delta line would tap Alaskan production and send it south on the Mackenzie line. North Slope reserve holders Exxon Mobil, BP and Phillips Alaska, which have been conducting a study to determine the best route to take, said recently they should have some answers in the next couple months. The Mackenzie-centered proposal, pushed by Canadian leaders and companies with leases in the region, would begin in the Mackenzie Delta and move through the Inuvik area.

In a venture similar to the GEOS deal, Anderson Exploration Ltd. and Akita Drilling Ltd. recently set up a joint venture with an Inuvialuit corporation to drill in the lower Mackenzie Delta (see NGI, July 30). The GEOS project would be up river, near the Norman Wells area, and GEOS said it will hold an advantage for drillers in that region because the Gwich'in have settled land claims disputes with the Canadian government and control the resources.

The GDC is the regional development vehicle for the Gwich'in beneficiaries of the Gwich'in Settlement Area of the Northwest Territories and is wholly owned by the Gwich'in Tribal Council, the governing body of the settlement. It maintains an investment portfolio with a mission to build capacity while providing business opportunities, employment and training.

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