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Sahtu seeing oil and gas spinoff benefits
Work started on record $534-million Mackenzie Plain exploration parcels

Thandiwe Vela
Northern News Services
Published Friday, June 15, 2012

Spin-off benefits from oil and gas exploration activity in the Sahtu region is showing promise for years to come, local industry is saying.

NNSL photo/graphic

Cargo is loaded onto a Northern Transportation Company Ltd. (NTCL) ship. The sealift operator is among the many businesses seeing spin-off benefits of increased oil and gas activity in the Sahtu region. - photo courtesy of Northern Transportation Company Ltd.

The activity, prompted by a record sale of oil and gas exploration licenses north and south of Norman Wells last year, was kicked off by Husky Energy Inc., which recently wrapped up its 2011-2012 winter drilling program.

The company drilled and cased two vertical pilot wells to evaluate the region's canol shale formation, and in April, completed a 3D seismic program over a 220-square-kilometre area.

"From what they indicated, they're going full tilt ahead," said Chris Buist, president of the Norman Wells and District Chamber of Commerce. "From indications, the data they got was of excellent quality, they see huge potential, so based on that, we don't see any change in their focus. They're going to be here and they're going to continue to be here."

Husky spokesperson Kim Guttormson would not comment on the specific results of the 2011-12 Slater River drilling and seismic program, but said it will be used to formulate the next stage of the Calgary-based company's evaluation program.

Husky was among the five oil and gas companies who bid a total of $534 million to explore land parcels in the central Mackenzie Valley area—a record sale for the region in terms of land area and bid values, according to the Department of Aboriginal Affairs and Northern Development Canada.

The arrival of barges full of drill rig components, bulldozers, dump trucks, and more equipment for the company's 2011-12 drill program significantly increased employment in the region, with 200 employed on site, according to the chamber, including 85 Dene Metis.

About 70 aboriginal businesses were working for Husky, Buist said, adding the spin-off activity was seen with construction services, medical services, logistical support, grocery stores, hotels, airlines, and other transport companies, including sealift operator Northern Transportation Company Ltd. (NTCL).

NTCL is anticipating the first appreciable amount of oil and gas cargo this year from scheduled sailings in the Norman Wells area and up the Mackenzie River as oil and gas activity grows, said Bill Smith, vice president of business development.

"It's certainly an area that's growing, particularly in the Norman Wells area where a number of oil and gas companies have made some major lease purchases in the last year and are looking at moving in a fare bit of equipment," Smith said. "I think it offers good spinoff business for all participants.

"People will be employed in the region and area."

ConocoPhillips Canada Resources Corp., ExxonMobil Canada Ltd., Imperial Oil Resources Ventures Ltd., MGM Energy Corp., and Shell Canada Ltd. were the other successful bidders in the region.

ConocoPhillips has done presentations to the communities and is proposing a summer-winter program within the same district, pending environmental approvals.

MGM has also applied to start drilling this year, Buist said, adding Shell and Imperial Oil have not yet given indicators as to their plans for the parcels.

Geologist Kenneth Drummond, of Calgary-based Drummond Consulting, said Norman Wells, discovered in 1920, is "the most important oil discovery in the Mackenzie Valley."

The total discovered recoverable oil and gas resource of the Mackenzie Valley, which includes the Liard Plateau, and the Mackenzie Plain, is 313 million barrels of oil and 1,963 billion cubic feet of natural gas, according to Drummond.

Aboriginal Affairs and Northern Development Canada has put two more parcels in the Sahtu region up for exploration bids this year, almost adjacent to the Mackenzie Plain parcels that were successfully bid on last year.

The closing date for bidding on the two Central Mackenzie Valley parcels is June 19.

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