Natural gas supply development is returning to the Canadian Arctic, initially to serve a small Mackenzie Delta fuel market.

The Delta is about 2,200 miles north of the border between the United States and Alberta. Delta native-owned Inuvialuit Petroleum Corp. and Ferus Natural Gas Fuels Inc. applied Thursday for approval by the Canada Energy Regulator (CER) for their estimated C$100 million ($80 million) for the Inuvialuit Energy Security Project (IESP). 

The project has been on the drawing board for several months.

Ferus NGF, an Alberta arm of Texas-based Energy & Minerals Group, plans to build a processing plant that could manufacture liquefied natural gas (LNG), propane and synthetic diesel. Ferus NGF built and operates Canada’s first merchant LNG plant in Alberta, which...