While three top Canadian producers move forward on tappingnatural gas reserves on the Mackenzie Delta and designing apipeline to bring it to market, the first step is being takentowards reopening drilling much farther north. For the first timesince the Prudhoe Bay discovery ignited an exploration rush on thetop of the world in the 1960s and ’70s, the vast Sverdrup Basin inthe Arctic Islands is being offered to gas hunters.
On behalf of the new Nunavut Territory of the eastern Arctic,Indian and Northern Affairs Canada issued a call for the industryto make “nominations” or selections of drilling prospects to besold at an auction in the new year. The invitation covers about127,600 square miles, a territory half the size of Alberta made upof frigid ocean, year-’round ice, rich wildlife habitat and asparse population of Inuit.
At the same time, Imperial Oil Ltd., Shell Canada Ltd. and MobilCanada extended their previously announced study into exploitingtheir Mackenzie Delta gas reserves. The companies said that afterfeasibility studies of potential production developments for about6 Tcf of gas reserves on land on the Delta they will commissionmore conceptual engineering work and start collecting environmentaldata in the new year. The companies also have about 6 Tcf ofdiscoveries in nearby shallow waters of the Beaufort Sea. A totalof 9 Tcf of reserves have been discovered in the Delta area, andthe National Energy Board estimates 55 Tcf of reserves remainundiscovered in the region.
The trio set a target of at least to beginning work on aregulatory application for production development and a pipeline in2001. An Imperial Oil spokesman pointed out that a relatively smallamount of greenfield pipeline construction would be required forthe Mackenzie Valley route because Enbridge already operates an oilpipeline that extends 540 miles from Imperial’s crude production inNorman Wells in the Northwest Territories south into Alberta. Thegreenfield construction would occur from Inuvik in the MackenzieDelta to Norman Wells, which is only about a 300-mile stretch.
So far, the companies have reported encouraging results from apioneering effort to form a business alliance with northern nativeorganizations. Imperial’s senior vice-president in charge of itsCalgary-based exploration and production arm, K.C. Williams,indicated the companies are intrigued by northern overtures fornative ownership of a pipeline. Williams said “our relationshipwith the Aboriginal Pipeline Group has been highly beneficial…..We are further encouraged that we will be working more directlywith the APG in 2001 to determine mutually acceptable arrangementsunder which a Mackenzie Valley pipeline could proceed.”
Similar hopes of a breakthrough in native relations – a keyfactor in stopping the last northern gas hunt long before the 1970sand ’80s price slumps – are being raised farther north in Nunavut.In extending the invitation to a drilling prospects sale, thefederal government stressed that it has support from northernnative authorities. The move was made possible by completion of aNunavut Land Claims Agreement that clarified territorial rights andthe requirements that Arctic native authorities intend to establishfor industry. The invitation included endorsements by the Nunavutgovernment and the native organization responsible for implementingthe claim settlement, Nunavut Tunngavik Inc. The territorialMinister of Sustainable Development, Olayuk Akesuk, declared, “Thiscall for nominations marks the start of a new era of exploration inone of Canada’s largest and least explored sedimentary basins.”
At the same time, the Inuit and federal authorities reminded theindustry that rather than being entirely virgin territory, theArctic Islands already recorded tantalizing results and establisheda decent success rate for wildcat frontier exploration. Of 160wells drilled in the region in the 1960s, ’70s and early-’80scampaign, one of every six resulted in discoveries. By the NationalEnergy Board’s count, the Arctic Islands are already known toharbour 10% of Canada’s known remaining conventional crude oil and23% of the nation’s gas endowment. Like the Delta-Beaufort region,the Arctic Islands have proved to be richest in natural gas. Whilefar from economic reach by tankers or pipelines, the remotediscoveries include two of the largest undeveloped gas fieldswithin Canada’s boundaries.
Although only the forthcoming auction will provide a reliablegauge of interest in reviving far northern exploration, industrysources point out that a vehicle for starting it up again stillexists. The Panarctic Oils consortium, while dormant sincecompleting an 11-year series of successful experimental tankershipments to Montreal in 1996, still exists in an office run by apart-time caretaker administration across a downtown Calgary streetfrom the headquarters of its majority owner, Petro-Canada.
At the height of the first Arctic Islands exploration campaign,Panarctic filled a Calgary office tower of its own and dispatchedfield hands and heavy equipment to work sites within 1,600kilometers of the North Pole.
The consortium’s celebrated leader, the late CharlesHetherington, presided over an 800-employee army of visionarygeologists, drilling specialists and engineers. They craftedambitious schemes for producing and delivering Arctic resources aswell as pioneering techniques for conducting industrial workyear-’round in conditions that still keep out all but a handful ofthe hardiest sportsmen, adventurers and scientists.
The gigantic expedition refined techniques such as airliftingheavy oilfield gear and drilling offshore from man-made islandsthat were artificial icebergs. The lessons of the first farnorthern oil and gas campaign remain preserved on industry shelvesand in vast archives at the Arctic Institute or North America,quartered on the campus of the University of Calgary. Much of theactivity was financed by federal incentive programs.
Petro-Canada acquired its Panarctic stake in 1975 as heir todirect government involvement in the resource hunt, doubling as anassertion of potentially contested national sovereignty. At theheight of the Panarctic campaign, which coincided with oil and gasprice peaks in the “energy-crisis” era of perceived globalshortages, Hetherington succeeded in securing extensive financialbacking from corporate giants in the United States. In the end, forexpenditures of $750 million to drill 174 wells, Panarcticestimated that it found 310 million barrels of oil and 17.3 Tcf ofgas.
Petro-Canada and the rest of the Panarctic consortium remain farfrom giving any sign that they intend to revive it. But thenorthward march of the Canadian industry is continuing, withPetro-Canada dispatching a purpose-built rig to the Delta thiswinter via ice roads to drill the first exploratory well there inrecent memory.
Gordon Jaremko, Calgary
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