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Offshore and Sahtu activity rule

Thandiwe Vela
Northern News Services
Published Monday, June 25, 2012

The Inuvik Petroleum Show saw a major shift this year as excitement moved from the stalled Mackenzie Valley pipeline project to increased activity and interest in oil exploration in the Sahtu region and Beaufort offshore.

Mackenzie Gas Project proponent Imperial Oil confirmed at the energy sector show Tuesday that the $16.2 billion 1,200 km natural gas line to Alberta is "not a commercial opportunity at this time."

The protracted regulatory process - which stretched for almost seven years before the project approval certificate was granted by the National Energy Board - a plunge in natural gas market prices and the lack of a fiscal agreement with the federal government were among the challenges cited by Heather Marreck, Imperial Oil's development executive on the project, during a presentation at the 12th annual Inuvik Petroleum Show, on behalf of the consortium of pipeline proponents Imperial Oil, Aboriginal Pipeline Group, Shell, ConocoPhillips Canada, and ExxonMobil Canada.

"As a company, Imperial Oil believes in this project," Marreck said, concluding it is "not the right time to restart activities."

Engineering and applications for some 7,000 permits required to go through with the project have been halted indefinitely, with pipeline offices in Fort Simpson and Norman Wells shut down.

Minister of Industry, Tourism, and Investment David Ramsay shot back at suggestions that the project is dead.

"Nobody's throwing in the towel on the Mackenzie Valley pipeline," he said.

Despite noting a 75 per cent reduction in the price of natural gas today, Aboriginal Pipeline Group president Bob Reid riled up the petroleum show crowd stating "APG is alive and well and MGP is also alive and well," to applause from the audience of delegates.

In a poignant moment of the session, Fred Carmichael, chairperson of the Aboriginal Pipeline Group, asked how many in the room want the pipeline to be built, and almost all of the delegates stood.

Marreck said she was not necessarily surprised by the show of support, but "satisfied" with it.

Commenting on the shift in focus for the petroleum show, Inuvik Mayor Denny Rogers said organizers were forced to broaden its scope.

"Obviously there is a delay right now with the Mackenzie Gas Project, which was why the show was developed in the first place," he said. "We've had to broaden our scope, so we're talking about infrastructure programs, we're talking about other areas in the region, for example the Sahtu, and offshore, and the response has been great."

Close to 500 delegates attended the show and almost half of this year's delegates were at the petroleum show for the first time, mostly drawn by increasing oil and gas activity around Norman Wells and the Beaufort Delta.

John Hogg, MGM Energy Corp. vice-president of exploration and operations, was among the speakers in a session on current oil and gas activity in the Sahtu.

MGM, which plans to launch a winter program on its shale play leases near Norman Wells this year, was among five major oil and gas companies that bid a total of $534 million on parcels in the central Mackenzie Valley last year. The other companies who now hold the Mackenzie Plain parcels are Shell Canada Ltd., Imperial Oil Resources Ventures Ltd., ConocoPhillips Canada Resources Corp., and Husky Energy Inc., which drilled and cased two vertical pilot wells in the region this year.

The use of hydraulic fracturing, also known as fracking, in the area was also discussed, with Ramsay assuring delegates that a campaign to grow awareness of the controversial extraction method to Northerners is ongoing.

A session on drilling and the offshore included presentations by Arctic Energy and Minerals Inc., international oil service company Schlumberger, and Sheila Reader of Conoco Phillips, who talked up the company's Amauligak property, in the shallow waters of the Beaufort offshore.

While supportive of the construction of an all-weather Inuvik to Tuktoyaktuk Mackenzie Valley highway, offshore explorers emphasized that the only options to get the resources to market are by pipeline or tanker.

In addition to the information panels and discussions, this year's delegates enjoyed popular speakers Vivian Krause, Ezra Levant and Amanda Lang, comedic and musical entertainment, and a weeklong warm and sunny streak in Inuvik.

"It's pretty cool to be in a place where you can legitimately wear your sunglasses 24 hours a day," said Paul Barrett, CEO of United Kingdom-based Arctic Energy and Minerals, which also holds a lease in the Mackenzie Beaufort, which Barrett called a "highly prolific province."

The most recent figures for the Beaufort Sea-Mackenzie Delta Basin, presented in 2009 by the Geological Survey of Canada, indicate an oil resource of 13.4 billion barrels of recoverable oil and a gas resource estimated at 66 trillion cubic feet.

Six more parcels in the Beaufort Sea and Mackenzie Delta are currently up for bidding until Sept. 6.

Aboriginal Affairs and Northern Development Canada also put two more parcels in the Sahtu region up for exploration bids this year, with bidding for those central Mackenzie Valley parcels closing June 19.

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