ARCHIVED - Northern Oil and Gas Annual Report 2007
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Author: Minister of Public Works and Government
ISBN: 978 0 662 48419 6
QS- 8509 080 EE A1
PDF Version (540 Kb, 28 Pages)
The management of oil and gas resources on Crown lands north of latitude 60° N in the Northwest Territories, Nunavut and the northern offshore is a federal responsibility carried out by the Northern Oil and Gas Branch of Indian and Northern Affairs Canada.
Petroleum resource management on Crown lands is exercised under federal legislation. The Canada Petroleum Resources Act and its regulations govern the granting and administration of Crown exploration and production rights and set the royalty regime. The Canada Oil and Gas Operations Act governs the regulation of petroleum operations and associated benefits requirements. Land, royalty and benefit matters are managed by the department on behalf of the Minister of Indian Affairs and Northern Development while the National Energy Board takes the lead role in approval of operations.
Table of Contents
- Message from the Honourable Chuck Strahl, P.C., M.P.
- Canada's Frontier Lands
- Northern Oil and Gas
- Oil and Gas Management
- Exploration Activity in the North
- Development and Production
- Further Information
Message from the Honourable Chuck Strahl, P.C., M.P.
Minister of Indian Affairs and Northern Development and Federal Interlocutor for Métis and Non-Status Indians
Now, more than ever, the enormous resource potential of the North is being unlocked – from the development of world-class diamond mines to the exploration of the North's extensive oil and gas reserves.
Last year, we saw seven new oil and gas exploration licences issued in the Mackenzie Valley and in the Mackenzie Delta-Beaufort Sea Basin, including one work expenditure bid for a record $585 million. Four significant new discoveries were declared, and the Joint Review Panel for the Mackenzie Gas Project completed their environmental assessment public hearings.
All of this activity demonstrates that industry partners recognize the potential that lies beneath the surface of the North's lands and waters.
The Government of Canada is convinced that this potential can drive the sustained economic activity needed to help provide wealth and employment to Northerners and, in turn, build strong and healthy Northern communities. A strong and prosperous North means a stronger and more prosperous Canada.
That is why we are determined to move farther and faster to prepare for the challenges and opportunities these developments represent, and why our Government is implementing an integrated Northern Strategy to ensure the North is ready for them.
Efforts such as the Northern Regulatory Improvement Initiative will help streamline the current complex approval process. Amendments to the Canadian Oil and Gas Operations Act and the Mackenzie Valley Resources Management Act will close regulatory gaps, ensure fair, nondiscriminatory access to pipelines and related facilities in the North, and honour the basic principle of"one project, one environmental assessment." Plans for new legislation in Nunavut will also resolve potential duplication in the environmental assessment process.
Improvements such as these will build on the momentum of previous years to encourage future exploration and development, protect the Northern environment, ensure all Northerners, including Aboriginal peoples, benefit directly from their growing economy, and help realize the benefits of Comprehensive Land Claims Agreements in the North.
I invite you to review this report for further details on the exploration and development of Canada's northern oil and gas resources over the past year.
In accordance with section 109 of the Canadian Petroleum Resources Act, I am pleased to table before Parliament this annual report on the administration of oil and gas lands in the Northwest Territories, Nunavut and the northern offshore for the year ending December 31, 2007.
April 28, 2008
Canada's Frontier Lands
Northern Oil and Gas
Much of Canada's undeveloped oil and gas potential is to be found in Canada's North. Some petroleum basins such as the Mackenzie Delta-Beaufort Sea Basin have seen significant exploration and already have a long inventory of discoveries. Others such as Canada's Arctic continental shelf and slope, the Mackenzie Valley of the Northwest Territories, and much of the High Arctic and eastern Arctic offshore remain lightly explored and offer opportunities to make new and potentially large discoveries of both gas and oil. The variety of geology in Canada's North offers a spectrum of plays ranging from onshore exploration for conventional gas or oil pools to major strategic opportunities in deep water basins around the continental margin.
Oil and gas exploration has a long history in the Canadian North, dating back to the Norman Wells oil discovery drilled in 1920. The late 1940s and 1950s saw increased exploration in the southern Northwest Territories followed by exploration throughout the North in the period 1960 to 1985, activity stimulated by the "oil price shock" of 1974 and concerns for domestic supply.
Current interest in the North dates from the mid-1990s. Oil and gas exploration and investment began to flow North in 1995 with the issuance of new Exploration Licences (EL) by the Crown in the southern Northwest Territories, closely followed by the Central Mackenzie Valley. In 1999 and 2000 companies acquired exploration rights to lands across much of the Mackenzie Delta and adjacent offshore. Subsequently, annual calls to industry to nominate new land blocks for exploration in the Central Mackenzie Valley and Mackenzie Delta- Beaufort Sea have sustained uptake of new Exploration Licences. This in turn has been followed by investment in exploration activities such as seismic prospecting and exploratory drilling.
Over the past decade, resurgent investment in oil and gas exploration and development in Canada's North has been a visible expression of Canadian sovereignty over this vast area and an important stimulus for economic activity.
Oil and gas leasing was active in the Central Mackenzie Valley and in the Mackenzie Delta-Beaufort Sea Basin. Seven new Exploration Licences were issued in 2007 as a result of these calls for a total work expenditure commitment of $613 million.
Three of these new Exploration Licences lie in the Beaufort Sea. The most northerly of these was won by Imperial Oil Resources Ventures Limited and ExxonMobil Canada Properties Limited with a record work expenditure bid of $585 million. This licence covers an extensive and previously undrilled region of the outer continental shelf extending into deep water off the shelf edge. The second offshore licence, issued to Chevron, lies the western Beaufort Sea close to existing discoveries at Adlartok (1985, oil) and Kingark (1987, gas). The third, to ConocoPhillips, is offshore Richards Island in an area extending north to adjoin the existing significant discovery licence at Amauligak, (a major oil and gas discovery made in 1983).
Four new Exploration Licences were issued following the Central Mackenzie Call for work expenditure bids totaling $15 million. Two of these, taken up by BG International Ltd., are in the Ka'sho-Got'ine district of the Sahtu west of the Colville Hills, an area with a proven gas play and four existing discoveries. One licence was issued to Husky in the Tulita District some 90 kilometres south of the hamlet of Tulita on the Mackenzie Plain. This new licence borders areas just to the North which have seen recent successful exploration by the same company. The third licence, issued to MGM Energy is centered 50 kilometres north of Norman Wells.
In the southern Northwest Territories Exploration Licences issued in the mid-1990s terminated over three years ago and consequently the region has seen no recent exploration activity.
No nominations were received for the Arctic Islands of Nunavut. Although the industry is aware of the significant discovered resource in the Arctic Islands, and of the excellent exploration potential, this result indicates that companies are deferring commitments to new exploration in this area for the time being.
In corporate news, of particular note was the creation of MGM Energy, first as a wholly owned subsidiary of Paramount Resources Ltd. and subsequently as a separate company. MGM became owner of exploration rights to extensive lands in the Mackenzie Delta, Colville Lake and certain other interests. Formerly owned by Paramount and before being conferred on the new company, these interests included a farm-in on EL394 and EL427 in the Mackenzie Delta, previously operated by Chevron. Later in the year MGM consolidated its land position on the Mackenzie Delta by purchasing EnCana's interests, including the 2006 gas discovery at Umiak.
Only one major development is currently proposed for the North. This is the Mackenzie Gas Project comprising development of three anchor fields in the Mackenzie Delta, construction of gathering and processing facilities, and a 1200 kilometre natural gas transmission pipeline to Alberta. Initially, production would be from the Imperial Oil's Taglu, ConocoPhillips' Parsons Lake and Shell Canada's Niglintgak gas fields in the Mackenzie Delta, currently held by significant discovery licences. Public hearings relating to facilities before the National Energy Board, and for environmental assessment before the Joint Review Panel were held during the year.
The number of exploratory wells in 2007 was lower than the previous year and drilling was limited to the Mackenzie Delta. The principle stimulus in this area was the entry of MGM Energy into Mackenzie Delta exploration with plans for a multi-year exploratory drilling program on its newly acquired Exploration Licences. Drilling in Central Mackenzie Valley is expected to revive next year on the basis of extensive seismic operations conducted in 2007. In the southern Northwest Territories activity focused on development of existing production operations, principally at Cameron Hills.
Promising indications from exploratory drilling in 2005 and 2006 were confirmed during the year when the National Energy Board declared four new significant discoveries. Two of these, at Olivier and Umiak, are in the Mackenzie Delta and add potential resources within a short radius of proposed developments for the Mackenzie Gas Project. MGM Energy has announced that the Umiak discovery holds approximately 444 billion cubic feet of gas (12.6 x 109m3) (MGM Energy Corp News release, December 10, 2007.) The third declaration was at the Devon Paktoa C-60 discovery drilled in the shallow waters of the Beaufort Sea. Company spokespersons have indicated that this discovery holds 240 million barrels of oil (3.8 x 107 m3) but development is not currently envisaged for the near future. In the Central Mackenzie Valley, the National Energy Board declared a significant discovery for the Husky et al. Stewart Creek D-57 well. This location is west of the Mackenzie River and some 50 kilometres south of Tulitá. It is of particular interest since this discovery extends across both Crown and private aboriginal lands.
Although overall natural gas production remained at levels similar to 2006, the decision by Paramount to suspend production from its three fields in the Liard Basin has left Cameron Hills as the principal producing field in the southern Northwest Territories (Limited production was still continuing from Paramount's West Liard field at year-end). The company cited low natural gas prices, few new gas finds and the lack of new lands opening up for exploration as the main reasons for this decision. Consequently by year end, only four fields were producing in the Northwest Territories, and none in Nunavut or offshore Arctic waters. In addition to the oil and gas field at Cameron Hills just north of 60, the Norman Wells oil field in the Central Mackenzie Valley continued to produce steadily into the Enbridge pipeline; and the Ikhil gas field on the Mackenzie Delta provided a secure supply of natural gas to the town of Inuvik.
Oil and Gas Resources
In 2002, a comprehensive review by Drummond Consulting for Indian and Northern Affairs Canada estimated that 33 percent of Canada's remaining conventionally recoverable resources of natural gas and 25 percent of remaining recoverable light crude oil occurs in Canada's Northwest Territories, Nunavut, and Arctic Offshore.
Potential natural gas resources are roughly split between the Northwest Territories, 2.3 x 1012 m3(82 trillion cubic feet - (Tcf), and Nunavut, 2.0 x 1012 m3(71 Tcf). These numbers include the portion lying beneath offshore waters adjacent to the Territories. The Northwest Territories has an ultimate potential for crude oil estimated at 0.9 x 109 m3(5.7 billion barrels) and Nunavut has a potential of 0.43 x 109 m3(2.7 billion barrels). It should be noted that estimates of potential based on sparse exploration and production data are inherently uncertain. This is the case for most of Canada's northern petroleum basins.
The most accessible of these potential resources lie between the border with the provinces at 60 degrees North and the Beaufort Sea in a broad corridor running between the Rocky Mountains and the Canadian Shield and includes the northern fringe of the Western Canada Sedimentary Basin. The western Arctic includes much of the Northwest Territories and adjacent Arctic offshore, and is estimated to contain about half of the recoverable petroleum in northern Canada, with the Beaufort Sea-Mackenzie Delta Basin the largest potential contributor.
Limited production from the southern Northwest Territories is exported from the Territory into the pipeline systems of Alberta and British Columbia. Gas production from a single small field in the Mackenzie Delta is consumed locally and gas produced with oil at Norman Wells is used for field operations. Ninety-six percent of oil production comes from the Norman Wells oil field in the Central Mackenzie Valley.
In the Beaufort Sea-Mackenzie Delta Basin, major gas fields at Taglu and Parsons Lake, together with the large Niglintgak field are proposed for development by the Mackenzie Gas Project (MGP). Combined resources in these fields are estimated by the proponents of the MGP at (161 x 109 m3(5.7 Tcf) (Imperial Oil Ventures Limited, 2004; Application to the National Energy Board for Approval of the Mackenzie Valley Pipeline; Volume II Economics, Tolls and Tarifs; Gas Supply Study, section 4.1.)
Over 50 other discoveries in this basin may have potential for subsequent development, including Amauligak, a major offshore discovery of both oil and gas, and a new significant discovery declared in 2007 at the Devon Paktoa C-60 well in the shallow waters of the Beaufort Sea, reported to contain 240 million barrels of oil (3.8 x 107 m3). Onshore Mackenzie Delta, there have been several recent gas discoveries, adding significant resources to the existing inventory of gas resources in the basin. Numerous others await discovery. Other developments which may be induced by the MGP are gas resources in the Central Mackenzie Valley which could access a Mackenzie Valley pipeline by means of a short lateral pipeline.
Discovered gas volumes in the High Arctic of Nunavut and the Northwest Territories are comparable to those in the Beaufort Sea-Mackenzie Delta region. The most promising basin is the Sverdrup Basin of the Arctic archipelago, where past discoveries include major gas fields at Drake Point and nearby Hecla with combined resources estimated at 257 x 109 m3(9.1 Tcf). Significant oil discoveries and large unexplored oil potential is also present in this vast region of diverse and varied geology.
Also of potential future interest for development are non-conventional hydrocarbons in the North. These include gas from coal, shale and large accumulations of methane hydrates beneath the Mackenzie Delta.
(and offshore, including Beaufort Sea)
|Nunavut (and offshore)||51.4||(324.0)||543.9||(19.2)|
Compiled and integrated from several published sources which may underestimate or overestimate actual field resources.
Numbers may not add due to rounding.
Totals have been reduced by estimates from Yukon but may include some Yukon resources in the Mackenzie Delta- Beaufort Sea Basin.
From: Drummond, K.J. 2005, updated to December 31, 2007: Canada's Discovered Oil and Gas Resources North of 60,
|Oil - C$ per m3
|Gas- C$ per GJ
Sources: Natural Resources Canada
Oil and Gas Management
The department provides industry with an annual opportunity to obtain exploration rights in the Northwest Territories, Nunavut and the northern offshore. The exploration rights are issued pursuant to the Canada Petroleum Resources Act.
A Call for Nominations precedes each Call for Bids. The Call for Nominations enables industry to specify blocks of land of interest for subsequent inclusion in a Call for Bids. Calls for Bids are in effect for the statutory minimum of 120 days. Crown rights are issued pursuant to an open, competitive bidding process. A single bid evaluation criterion - currently the total expenditure that a bidder would spend on exploration of the land block - is used to determine the successful bidder who is issued an Exploration Licence of up to nine years. The successful bidder is required to spend the dollar value of the proposed work during the first four or five years of the licence and drill one well during this first period.
In accordance with the provisions of comprehensive land claim settlement agreements, the Department seeks the views and support of Aboriginal communities and organizations prior to rights issuance on the terms and conditions of the issuance and related matters. The Department is also working towards establishing measures that would meet the needs and provide economic opportunities for those areas without a land claim settlement, primarily in the southern Northwest Territories.
In November 2006 and January 2007, two Calls for Nominations closed with three parcels nominated in the Beaufort Sea/Mackenzie Delta area and four parcels nominated in the Central Mackenzie Valley. Although a Call for Nominations was issued for the Arctic Islands of Nunavut, no postings were received.
All nominated parcels were included in subsequent Calls for Bids. The Central Mackenzie Valley Call for Bids, which closed on May 8, 2007, resulted in the issuance of four new Exploration Licences (EL442 - 445) covering 310,324 hectares and totaling $15,348,888 of work expenditures. The Beaufort Sea/Mackenzie Delta Call for Bids, which closed on July 17, 2007, resulted in the issuance of three Exploration Licences (EL446 - 448) covering 417,217 hectares and totaling $598,094,231 of work expenditures.
In December 2007, three Calls for Nominations were issued; for the Central Mackenzie Valley and for the Beaufort Sea/Mackenzie Delta both closing January 30, 2008, and Arctic Islands of Nunavut, closing on February 6, 2008. One parcel was nominated in the Central Mackenzie Valley and 5 parcels were nominated in Beaufort Sea/Mackenzie Delta. These were subsequently included in a Call for Bids issued in early February 2008.
Interests Issued in 2007
In 2007, seven new Exploration Licences were issued as a result of the successful Calls for Bids. The four issued in the Central Mackenzie Valley were EL442 to MGM Energy Corp.; EL443 to Husky Oil Operations Limited and International Frontier Resources Corporation; EL444 to BG International Limited and EL445 to BG International Limited and International Frontier Resources Corporation. The remaining three in the Beaufort Sea/Mackenzie Delta were EL446 to Imperial Oil Resources Ventures Limited and ExxonMobil Canada Properties Limited; EL447 to ConocoPhillips Canada Resources Corp., and EL448 to Chevron Canada Limited.
During 2007, six Significant Discovery Licences (SDL) were issued: SDL126 to ConocoPhillips Canada Resources Corp.; SDL127 to Anadarko Canada Corporation, Canadian Forest Oil Ltd. and Paramount Resources; SDL128 and SDL129 to Anadarko Canada Corporation and Paramount Resources Ltd; SDL130 to Devon ARL Corporation; and SDL131 to ConocoPhillips Canada Resources Corp. and MGM Energy Corp. There were no production licences issued in 2007.
During 2007, five Exploration Licences terminated, one by expiry and three by surrender. One licence was partially surrendered.
Significant and Commercial Discovery Declarations and Development Plan Submissions
The National Energy Board issued four significant discovery declarations during 2007: to Chevron Canada Limited in respect of the Chevron et al Olivier H-01 well on the Mackenzie Delta; to EnCana Corporation in respect of the EnCana et al Umiak N-16 well also on the Mackenzie Delta; to Devon Canada Corporation in respect of the Devon Paktoa C 60 well in the Beaufort Sea; and, to Husky Oil Operations Ltd. in respect of the Husky et al Stewart Creek D-57 well in the Central Mackenzie Valley.
The Board also received a significant discovery declaration application from Chevron for the Chevron et al Ellice I-48 well in the Mackenzie Delta during the calendar year 2007 which was declared in early 2008.
No commercial discovery declaration or development plan applications were received or approved during 2007.
|Region||Number of Licences||Date Issued||Licence Term
in years (periods)
|Southern NWT (Fort Liard)||6||April 1996||7 (4+3)|
|Central Mackenzie Valley||7||May 1997||8 (4+4)|
|6||Aug. 2000||8 (4+4)|
|5||Sept. 2001||8 (4+4)|
|1||May 2003||8 (4+4)|
|4||June 2004||8 (4+4)|
|6||May 2005||8 (4+4)|
|6||May 2006||8 (4+4)|
|4||May 2007||8 (4+4)|
|Beaufort Sea / Mackenzie Delta||2||Jan. 1997||9 (5+4)|
|4||Sept. 1999||9 (5+4)|
|9||Aug. 2000||9 (5+4)|
|2||May 2002||9 (5+4)|
|1||June 2004||9 (5+4)|
|2||May 2006||9 (5+4)|
|1||Sept. 2007||9 (5+4)|
|1||Oct. 2007||9 (5+4)|
|1||Dec. 2007||9 (5+4)|
|Region||Exploration Licence||Production Licence||Significant Discovery Licences||Total|
|Eastern Arctic Offshore||0||0||11,184||873,684 1*|
|Hudson Bay 4*||0||0||0||126,376 2*|
|Mackenzie Valley||1,929,092||32,842||113,915||2,104,641 3*|
* Former Permits and/or Pioneer Leases.
1 Includes 862,500 hectares in restricted area/under former rights.
2 Includes 126,376 hectares in restricted area/under former rights.
3 Includes 28,149 hectares under former rights.
4 Permits under the administration of the Minister of Indian Affairs and Northern Development.
|Region||Exploration Licence||Production Licence||Significant Discovery Licence||Former Rights 1|
|Eastern Arctic Offshore||0||0||1||30|
|Hudson Bay||0||0||0||8 2|
|Mackenzie Delta||3||1 3||34||0|
1 Permits and/or Pioneer Leases under former legislations.
2 Permits under the administration of the Minister of Indian Affairs and Northern Development.
3 On Inuvialuit lands
Administration of Interests
There were 35 Exploration Licences active at the end of 2007. Each Exploration Licence issued as a result of a Call for Bids requires the interest holder to submit 25 percent of the work expenditure bid as a deposit. Both the work deposit required for Period 1 and the rentals in Period 2 are refundable upon completion and approval of the work undertaken on the licence. Should expenditures in Period 1 fail to meet the amount of the work expenditure bid, the residue of the deposit is forfeited. The rentals are required in full at the beginning of each year in Period 2. Any rental balance remaining at the end of Period 2 is forfeit.
Administration of the deposits includes the approval of allowable expenditures submitted as exploratory work is completed. Deposit administration is ongoing throughout the year as new deposits are received for the rentals due in Period 2 and / or amendments are made with respect to those already in the system.
|Well to be Drilled by (y.m.d)||Expiry Date (y.m.d)||Work Bid Amount (in $)|
|Beaufort Sea/Mackenzie Delta|
|EL3172||175,810||Talisman Energy Inc.||1986.10.05||n/a||n/a|
|EL3292||349,981||BP Canada Energy
|EL394||73,155||Chevron Canada Limited||1999.09.18||2004.09.17||Τ||2008.09.17||42,375,000.00|
|EL4203||338,469||Devon ARL Corporation||2002.08.15||2005.08.14||Τ||2009.08.14||224,069,655.56|
|73,608||Chevron Canada Limited||2004.09.20||2005.08.14||Τ||2009.08.14||151,758,288.00|
|18,912||Chevron Canada Limited||2004.09.20||2007.05.13||Τ||2011.05.13||151,758,288.00|
|56,057||Chevron Canada Limited||2004.09.20||2009.06.07||Τ||2013.06.07||151,758,288.00|
|EL434||56,619||MGM Energy Corp.||2006.05.03||2011.05.02||2015.05.02||40,169,000.00|
|EL435||99,942||Shell Canada Limited||2006.05.03||2011.05.02||2015.05.02||11,552,331.50|
|EL446||205,321||Imperial Oil Resources
|EL448||108,185||Chevron Canada Limited||2007.12.31||2012.12.30||2016.12.30||1,010,100.04|
|Mainland – Central Mackenzie Valley|
|EL397||134,964||Husky Oil Operations
|EL399||120,496||MGM Energy Corp.||2000.08.01||2004.07.31||Τ||2008.07.31||8,400,000.00|
|EL413||80,464||Kodiak Energy Inc.||2001.09.18||2005.09.17||Τ||2009.09.17||2,000,000.00|
|EL414||84,880||Apache Canada Ltd.||2001.09.18||2005.09.17||Τ||2009.09.17||10,750,000.00|
|EL423||90,632||Husky Oil Operations
|EL424||80,608||MGM Energy Corp.||2004.06.08||2008.06.07||2012.06.07||8,100,000.00|
|EL426||36,728||MGM Energy Corp.||2004.06.08||2008.06.07||2012.06.07||8,100,000.00|
|EL428||81,008||Apache Canada Ltd.||2005.05.18||2009.05.17||2013.05.17||3,200,000.00|
|EL429||82,880||BG International Limited||2005.05.18||2009.05.17||2013.05.17||12,500,000.00|
|EL430||51,637||MGM Energy Corp.||2005.05.18||2009.05.17||2013.05.17||3,510,000.00|
|EL432||64,048||BG International Limited||2005.05.18||2009.05.17||2013.05.17||4,000,000.00|
|EL436||84,353||Talisman Energy Inc.||2006.05.10||2010.05.09||2014.05.09||12,150,000.00|
|EL437||85,993||Talisman Energy Inc.||2006.05.10||2010.05.09||2014.05.09||32,775,000.00|
|EL438||87,183||Talisman Energy Inc.||2006.05.10||2010.05.09||2014.05.09||3,850,000.00|
|EL439||82,820||Talisman Energy Inc.||2006.05.10||2010.05.09||2014.05.09||5,125,000.00|
|EL440||87,872||MGM Energy Corp.||2006.05.10||2010.05.09||2014.05.09||6,300,000.00|
|EL441||88,452||Husky Oil Operations
|EL442||63,312||MGM Energy Corp.||2007.05.10||2011.05.09||2015.05.09||8,260,000.00|
|EL443||91,116||Husky Oil Operations
|EL444||74,604||BG International Limited||2007.05.10||2011.05.09||2015.05.09||1,100,000.00|
|EL445||81,292||BG International Limited||2007.05.10||2011.05.09||2015.05.09||1,100,000.00|
1 These representatives are current to date of draft i.e. December 2007.
2 Under work prohibition orders.
3 Consolidation per s. 25(3) of the Canada Petroleum Resources Act.
Note that on consolidated licences, one well may not be sufficient to hold all lands in the licence, depending on the terms and conditions.
√ Well requirement met as of year end. The drilling of one exploratory or delineation well prior to the end of Period 1 of the term is a condition precedent to obtaining tenure to Period 2.
Security Deposits Being Administered as of December 31, 2007
Security deposits for Period 1 and 2 are held on a refundable basis.
Period 1 = $270,850,871 (refunded at $1 for each $4 spent)
Period 2 = $3,398,355 (refunded at $1 for each $1 spent)
* Forfeiture monies are revenues received within the calendar year and may be for Period 1 or 2 of an exploration licence
Section 21 of the Canada Petroleum Resources Act (CPRA) requires that a Benefits Plan is submitted to the Minister before any exploration or development activity can take place on frontier lands, i.e., the Northwest Territories, Nunavut and the offshore non-accord areas.
A Benefits Plan is the process by which a company describes the principles, strategies and procedures that it will commit to and implement to ensure that full and fair opportunity is provided to qualified Canadians and Canadian businesses that compete for jobs and business contracts for exploration and development activities. The department requires that a company monitor and submit regular reports on the implementation of the commitments in a Benefits Plan. As a long-standing practice, the department has encouraged companies to favour on a competitive basis local and regional qualified Aboriginal and northern Canadians and businesses.
In terms of exploration and development activities this year on frontier lands, exploration in the Mackenzie Valley provided training, employment and business benefits for local northern communities. In the Southern Mackenzie Valley, ongoing oil and gas production in the Cameron Hills area and gas production in the Fort Liard area supported sustained local and regional economic benefits. In the Mackenzie Delta area and in the northern offshore, renewed activity after a long hiatus has generated a succession of benefits, and the outlook for continued activity on frontier lands suggests future opportunities. A recent addition to northern exploration activities, gas hydrate research, has also contributed to training, jobs and business opportunities to local northern communities. The Northern Oil and Gas Branch works closely with the Petroleum Development Division in DIAND's Northwest Territories Regional Office in Yellowknife. This Division administers the Benefits Plans for exploration activities in the region.
As part of the annual process leading to Calls for Nominations, northern aboriginal groups are notified of our intention to open lands, as required under comprehensive land claim agreements, and are provided the opportunity to identify areas of environmental sensitivity, and those of special interest for cultural and spiritual reasons. Other concerns with respect to oil and gas development may also be discussed.
INAC works throughout the year with groups responsible for developing the Protected Areas Strategy, Marine Protected Areas, Migratory Bird Sanctuaries and land use plans, such as the draft Sahtu and Dehcho Land Use Plans, towards maintaining a balanced approach to resource management. INAC also provides territorial governments and other federal departments opportunity for input.
Environmental considerations play an important role in our rights issuance process as well as when issuing land use permits, water licences, and all work authorizations.
The area opened for nominations, the Call for Nominations package, and the terms and conditions associated with both the Calls for Nominations and Bids reflect the results of advice received through this engagement process.
Environmental Studies Research Funds
Under the Canada Petroleum Resources Act, the Environmental Studies Research Funds (ESRF) finance environmental and social studies related to the exploration and development of oil and gas resources on frontier lands. Responding to the resurgence of oil and gas activity in the North, the ESRF Management Board funded their northern study program for 2007 through levies agreed to by industry representatives and subsequently approved by the Minister. The budget approved for the North by the ESRF Management Board for 2007 amounted to $487,400.
Two final reports on northern research projects were published: Report #161 "Review of the Ikhil Gas Development and Pipeline Regulatory and Environmental Process: Lessons Learned" prepared by KAVIK-AXYS Inc.; and Report #162 "Assessing the Potential Effects of Nearshore Hydrocarbon Exploration on Ringed Seals in the Beaufort Sea Region 2003-2006" by Lois Harwood, Thomas G. Smith and Humfrey Melling.
Work was completed on the project to compile an inventory of well sumps in the Inuvialuit Settlement Region and to establish a sumps database which will be publically accessible through Indian and Northern Affairs Canada. Other 2007 projects included: a workshop to provide feedback on the traditional knowledge guidance document for environmental assessment, an initial draft of the biophysical research requirements (data gaps) for Beaufort Sea hydrocarbon development, and a northern cumulative effects study.
Exploration Activity in the North
Only three new exploratory wells were commenced in 2007 - all in the Mackenzie Delta. Although no drilling occurred in the Central Mackenzie Valley, exploration companies were active with seismic programs. Drilling is expected to resume next winter season.
In the southern Northwest Territories, development drilling continued at Cameron Hills to sustain oil and gas production. Six new wells were drilled between January 15 and March 4. In addition to new wells, seven existing wells were re-entered in the southern Northwest Territories for various well operations.
Two new wells were drilled on the Mackenzie Delta at Kugpik I-25 and Unipkat M-45. Both were on EL394, acquired by MGM Energy from Chevron. Late in the year the company spudded a new well at Atik P-19 on EL419. This is the first of a three well program planned for winter 2007-2008.
Also on the Mackenzie Delta two test wells were re-entered at Mallik as part of the continuation of the scientific and engineering research program on gas hydrates.
The total metreage drilled in the Northwest Territories (including both exploratory and development wells) was 13,616 m, only slightly less than in 2007. There were no oil and gas drilling/ operations in Nunavut or the eastern Arctic. New well costs amounted to $46 million and re-entries of existing wells to $22 million.
Fourteen industry geophysical and geological programs were conducted in 2007. This total comprised five field seismic acquisition programs totaling an estimated 6027 km of 2-dimensional (2D). The most extensive of these was conducted in the Beaufort Sea where GXT returned to extend its seismic coverage acquired the previous year. The area of interest extended to deeper water areas and to waters offshore Banks Island. Kodiak, Talisman and BG Canada each shot separate 2D seismic programs in the Central Mackenzie Valley on their respective Exploration Licences.
In addition, one aeromagnetic program, one geological field party, four gravity surveys and two geochemical surveys were undertaken - all in the Northwest Territories. One program entailed reprocessing of existing seismic data only, with no field acquisition.
|PARA ET AL CAMERON L-40||60.1599||-117.6211||Dev||1453||1453||15-Jan-07||26-Jan-07||P&S||PL15|
|PARA ET AL CAMERON J-04||60.0587||-117.5133||Dev||1448.7||1448.7||26-Jan-07||16-Feb-07||P&S||PL13|
|PARA ET AL CAMERON L-29||60.1448||-117.5929||D||1515||1515||28-Jan-07||7-Feb-07||P&S||P&S PL18|
|PARA ET AL CAMERON L-73||60.0440||-117.4984||Dev||1450||1450||10-Feb-07||1-Mar-07||P&S||PL04|
|PARA ET AL CAMERON A-03||60.0368||60.0368||Dev||1589||1589||10-Feb-07||21-Feb-07||P&S||PL17|
|PARA ET AL CAMERON E-72||60.0237||-117.4975||Dev||1450||1450||24-Feb-07||4-Mar-07||P&S||PL20|
|Chevron et al Kumak I-25||69.2451||-135.0846||E||2100||2100||7-Feb-07||7-Mar-07||P&S||EL394|
|Chevron et al Unipkat M-45||69.2488||-135.4558||E||1397||1397||14-Mar-07||22-Mar-07||P&A||EL394|
|MGM et al Atik P-19||69.9682||-135.5345||E||1803||589||23-Dec-07||26-Jan-07||P&S||EL419|
|PARA ET AL SOUTHEAST FORT LIARD N-01||60.01453||-123.2663||E||1940||1940||23-Jan-07||5-Feb-07||P&S||PL12|
|PARA ET AL CAMERON E-07||60.10553||-117.5271||Dev||1457||1457||24-Jan-07||5-Feb-07||P&S||PL14|
|PARA ET AL CAMERON 2F-73||60.0401||-117.4914||D||1562||1562||5-Feb-07||8-Feb-07||Pr||PL04|
|AURORA/JOGMEC/NRCAN MALLIK 2L-38||69.46131||-134.6584||Dev||1320||1320||15-Feb-07||10-Apr-07||P&S||SDL060|
|AURORA/JOGMEC/NRCAN MALLIK 3L-38||69.46064||-134.6616||O||1188||1188||15-Feb-07||17-Mar-07||P&S||SDL060|
|PARAMOUNT ET AL CAMERON A-05||60.06728||-117.5076||E||1514.6||1514.6||19-Feb-07||27-Feb-07||Pr||PL13|
|PARA ET AL CAMERON H-03||60.0399||-117.5021||Dev||1662||1662||24-Feb-07||26-Feb-07||P&S||PL17|
|PARA ET AL CAMERON C-74||60.05369||-117.4909||Dev||1626||1626||26-Feb-07||27-Feb-07||Pr||PL13|
|PARAMOUNT ET AL BOVIE C-76A||60.25411||-122.9895||E||3464||3464||1-Mar-07||31-Mar-07||P&S||SDL122|
1 Class E=exploratory, D=delineation, P=production, Dev=development
2 Status P&S=plugged and suspended, P&A=plugged and abandoned , PR=production
3 Licence EL=Exploration Licence, SDL=Significant Discovery Licence, PL=Production Licence, SA=Sahtu Lands
|2D Seismic (in Km)||1554.0||3251.0||2506.0||586.0||189.0||564.0||5483||6027.95|
|3D Seismic (in Sq.Km)||307.0||7893.0||4060.0||194.0||804.0||635.0||1100||0|
Figure 1: Wells Drilled
* Excludes Norman Wells development drilling
Figure 2: Seismic Acquisition
Development and Production
During the course of 2007, Paramount Resources Ltd. announced that it would be suspending operations in the Liard Basin. Production from two fields (Liard and South-east Liard) was suspended by year end. The company cited low natural gas prices, few new gas finds and lack of new lands opening for exploration as the main reasons for this action. The West Liard field feeding the Liard pipeline has been in sharp decline for several years but was still producing from one well at year end. Apart from this, the only field producing from the southern Northwest Territories by year-end was Cameron Hills, also operated by Paramount.
Only two other fields were on production in the Northwest Territories: the large Norman Wells oil field in the Central Mackenzie Valley and the Ikhil gas field on the Mackenzie Delta. The former is the northern anchor for the Enbridge Norman Wells oil pipeline which terminates in Zama, Alberta, while Ikhil gas is produced through a 50 kilometre pipeline to Inuvik where it is used for power generation and heating. No fields were producing from Nunavut or offshore Arctic waters.
Total natural gas production in the Northwest Territories in 2006 was 322.3 x 106 m3(11.4 billion cubic feet), about one third of this represents associated gas at Norman Wells which is used for field operations.
Total aggregate oil production was 1017.6 x 103 m3 (6.41 million barrels), reflecting the steady 5% decline in production from Norman Wells and lower production from Cameron Hills.
|Oil Production (thousands of m3)|
|Norman Wells (G001 - Imperial Oil)||1375.4||1254.6||1186.7||1042.6||1012.4||964.3|
|Cameron Hills (G010 - Paramount)||1.1||28.5||48.6||47.2||70.3||53.3|
|Gas Production (millions of m3)|
|Norman Wells (G001 - Imperial Oil)||123.3||108.6||103.7||102.4||109.3||103.7|
|Ikhil (G005 - AltaGas)||14.8||15.2||16.1||15.7||16.2*||17.9|
|Fort Liard (G-006 - "F-36" - Paramount)||38.8||16.5||11.2||50.7||29.9||52.61|
|Fort Liard (G007 - "K-29" - Paramount)||834.1||680.3||465.4||203.3||59.1||49.1|
|Fort Liard (G008 -"P-66A" - CNRL)||Shut-in||9.8||Shut-in||Shut-in||Shut-in||Shut-in2|
|Southeast Fort Liard (G009 - "N-01" - Paramount)||61.9||51.1||48.1||38.8||11.9||01|
|Cameron Hills (G010 - Paramount)||124.1||104.1||92.8||91.3||93.5||99.0|
*Previously reported amounts have been restated to reflect amendments and corrections.
1 Production suspended at year-end.
Figure 3: Oil Production
Figure 4: Gas Production
Figure 5: Oil and Gas Fields - Southern Northwest Territories
|Field Code (New Code)||Field Name (Discovery Well)||Licences|
|G003||Pointed Mountain *||PPL 01- 09|
|G006 (6675)||Fort Liard ("F-36")||PL 07, PL08|
|G007 (6674)||Liard ("K-29")||PL09, PL11|
|G008||Liard ("P-66A") *||PL10|
|G009 (6678)||Southeast Fort Liard ("N-01")||PL12|
|G010 (3200)||Cameron Hills||PL03-05, PL13-18|
Royalties paid from northern oil and gas production in the calendar year 2007 were $25,078,071.
The 18 percent decrease from 2006 is because the 2006 total included amounts from adjustments to the 2004 and 2005 years.
* Previously reported amounts have been restated to reflect amendments and corrections.
Audits and Assessments
Two audits were underway during 2007. One audit was completed and the second audit is scheduled to be completed in 2008.
The development of a new web-based royalty management system (RMS) continued. During 2007 significant progress was made on the development of the system. At year end, it was undergoing user acceptance testing. It is scheduled to be rolled out in 2008.
A project is underway to modernize the Frontier Lands Petroleum Royalty Regulations (FLPRR). The project's objectives are to identify areas where the regulations could be amended to better meet today's operating environment, to strengthen royalty accountability and assurance, to improve fairness, and to improve the administrative efficiency of the royalty regime.
On December 15, 2007, the regulatory amendments were published in the Canada Gazette Part I for a 30 day comment period. Comments were received from one stakeholder group, who expressed their support for the amendments.
Northern Oil and Gas Branch
Many sources of information on oil and gas, environmental, and land use matters originate with the Department of Indian Affairs and Northern Development. To obtain specific information, please contact appropriate individuals below by phone or in writing through the general mailing address for the Department.
Northern Oil and Gas Branch
Oil and Gas Management Directorate
Department of Indian and Northern Affairs
OTTAWA ON K1A 0H4
Northern Oil and Gas Branch
Oil and Gas Management Directorate
10th Floor, 15/25 Eddy Street
GATINEAU QC K1A 0H4
Telephone: (819) 997-0877
Fax: (819) 953-5828
Information on the resource management regime, calls for nominations and bids, and other related information: Manager, Land Tenure - Telephone: (819) 934-9392
Information on registration procedures and regulations, exploration, significant discovery and production licences, transfers, and notices: Registrar - Telephone: (819) 953-8529
Information on Northern Oil and Gas Maps, and Geographic Information System (GIS) Data: Geomatic Officer - Telephone: (819) 953 8988.
Information on northern exploration history and geological / geophysical activities: Senior Petroleum Geologist - Telephone: (819) 953-8722
Information on royalty policy and royalty submissions: Manager, Fiscal Policy and Royalty Administration - Telephone: (819) 953-8790
Information on Benefits Plan requirements for Nunavut and northern offshore is available from the Northern Oil and Gas Branch - Telephone (819) 953-2087.
Information on Benefits Plan requirements associated with new exploration programs on land in the Northwest Territories is available from the department's Northwest Territories Regional Office at:
Petroleum Development and Benefits Division
Northwest Territories Regional Office
Department of Indian and Northern Affairs
4914-50th Street, P.O. Box 1500
YELLOWKNIFE NT X1A 2R3
Telephone: (867) 669-2618 / Fax: (867) 669-2409
Other Sources of Information
Through the offices of the National Energy Board at the address below, information on the following is available
- The Regulatory Support Office has information on exploration, development, production, pipeline transportation, and export.
- The Frontier Information Office provides access to maps, technical information, geological and geophysical reports, well history reports and records.
- The Environmental Directorate provides the Secretariat for the Environmental Studies Research Funds Management Board.
National Energy Board (NEB)
444 Seventh Avenue SW
CALGARY AB T2P 0X8
Telephone: (403) 292-4800
Fax: (403) 292-5503
Geological Survey of Canada Calgary provides public viewing and sampling facilities for cores and samples, and information on wells drilled north of 60°N at its offices at:
Geological Survey of Canada Calgary
3303-33rd Street NW
CALGARY AB T2L 2A7
Telephone: (403) 292-7000
Fax: (403) 292-5377
Information on wells drilled in the Baffin Bay - Davis Strait region is available from:
Iris A. Hardy, Curator National Marine Geosciences Collection
Geological Survey of Canada Atlantic
Core Storage and Laboratory
Bedford Institute of Oceanography
P.O. Box 1006
DARTMOUTH NS B2Y 4A2
Telephone: (902) 426-6127
Fax: (902) 426-4465
- Date modified: