ARCHIVED - Beaufort Sea and Mackenzie Delta Open for Posting

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Bulletin
Volume 5, Number 1
January 1998

The Minister of Indian Affairs and Northern Development is inviting industry to select exploration acreage over some 100 million hectares (385,000 square miles) in the Mackenzie Delta, Beaufort Sea and western Arctic Islands.

The Call for Nominations opens at 9:00 a.m. on Monday February 2 and closes at 4:00 p.m. (Eastern Time) on Thursday April 9, 1998. Posted parcels will be included in a competitive call for bids scheduled to close in August 1998.

Paper copies are also available from the Northern Oil and Gas Directorate (819) 953-8722 or the Frontier Information Office of the National Energy Board in Calgary (403) 299-3112.

Map of the Beaufort Sea - Mackenzie Delta
Detailed Map of the Beaufort Sea - Mackenzie Delta

It is the tenth year in a row that this area has been opened to posting requests. The last exploration licences issued in this region were awarded to Husky and Gulf for two parcels in the Mackenzie Delta. The annual cycle of nominations meets the expectation of local communities and industry for a predictable planning environment which should assist in developing land acquisition, exploration and other business strategies.

Potential of Available Acreage

The Call for Nominations includes two highly prospective sedimentary basins with a proven record of discoveries. Most significant in terms of discovered resources and potential is the Beaufort-Mackenzie Basin underlying the Mackenzie Delta and adjacent offshore. Second in importance is the Sverdrup Basin in the Arctic Islands, the western portion of which lies within the Inuvialuit Settlement Region and is included in this Call. In addition, very large areas of the sparsely explored continental margin extend west from the Mackenzie Delta to the US border and east to the mainland adjacent to the Canadian Arctic Islands. Several sedimentary basins and sub-basins which are poorly explored or undrilled underlie this margin and others may yet be identified.

The Mackenzie Delta-Beaufort Sea basin has an excellent discovery record with 53 discoveries, including two major oilfields, three major gas and one major oil and gas field. A 1994 resource assessment by the Geological Survey of Canada (GSC) suggested that the prospects for doubling the number of discoveries in this size range are good, in both onshore and offshore exploration plays. (A major field contains oil resources from 100 to 500 million barrels / 15 to 80 million cubic metres or gas resources of 1 to 5 trillion cubic feet / 28 to 142 billion cubic metres).

Discovered resources in this basin total 332 billion cubic metres (10.7 trillion cubic feet) of gas, and 277 million cubic metres (1.74 billion barrels) of oil. The GSC also estimated regional endowment of recoverable resource in terms of resources of current interest. Using oil resources in pools exceeding 25 million barrels and gas pools larger than 100 billion cubic feet, the total resource of current interest was estimated at 4.4 billion barrels of oil in 50 pools and 28 tcf of gas in 65 pools. Of this, 3 billion barrels of oil and 17.2 tcf of gas remain to be discovered. (Geological Survey of Canada, 1994, Petroleum Resources of the Mackenzie Delta and Beaufort Sea, GSC Bulletin 474.)

This discovered inventory forms a basis for future projects to export both oil and gas from the Mackenzie Delta region to southern markets. Such export has been proposed in the past, most recently in 1989 for gas export from the Delta by a consortium of Esso, Shell and Gulf. Extension of the Mackenzie Valley oil pipeline some 600 km from Norman Wells to the Delta could tie in existing onshore oil discoveries and also the jewel of the shallow offshore -- the Amauligak field (300 million to 400 million barrels of oil and in excess of 2 tcf of gas).

The main question about these developments is "when?". Renewed exploration and discovery of additional reserves in the region over the life of new exploration licences issued as a result of this Call would advance the prospects of such a major development. So could perhaps recent reports suggesting that the cost of drilling in the Beaufort Sea has been brought down by large explorers on the U.S. side of the Beaufort.

Royalty Forms and Guidelines

Forms and guidelines to assist individuals (holders of a production licence or their representative) who are required by the Canada Petroleum Resources Act and the Frontier Lands Petroleum Royalty Regulations to pay royalties or provide related information are now available on our Internet website or from Marlene Desjardins (819) 953-8529.

Ikhil Development Project

If their project goes ahead as planned, the Inuvialuit Petroleum Corporation (IPC) could be supplying the town of Inuvik (population of about 3,000) with natural gas by the fall of 1999. The National Energy Board has approved the development plan submitted by IPC to develop the Ikhil gas field located approximately 50 km (30 miles) to the northwest of Inuvik. The reservoir, discovered by Gulf et al in 1986, is currently held by IPC.

IPC conducted an extensive testing program during the winter of 1997 which confirmed that the reservoir is capable of producing gas at very high rates; at current rates of consumption, the in-place gas reserves could supply all of Inuvik's heating and power needs for approximately 15 years.

In order to produce the natural gas, IPC plans to use the existing K-35 well and to drill two additional wells during the winter of 1997-1998. They also plan to construct a 150 mm (6 inch) diameter pipeline over approximately 50 km (30 miles) to the town site next winter.

This project displaces diesel as the principal fuel in this community. The project advances self-sufficiency by using local fuels and increasing local jobs and skills. It also reduces risk inherent with importing fuel and the move to natural gas will lower harmful atmospheric emissions. A key economic driver for the community and the Inuvialuit will be in local hands. Savings from cheaper local energy will strengthen the capacity of the region to meet the challenge of developing a sustainable economy.

Mallik Gas Hydrate Test

A new scientific test well is being drilled on Imperial Oil's Mallik L-38 discovery on Richards Island this winter. The main objective of this research program is to evaluate hydrate drilling/coring and completion technologies in sediments rich in gas hydrates. This project was conceived and funded by the Japanese National Oil Company with a view to developing hydrate resources offshore Japan. The well is operated by Japex and is targeted to a depth of 1,100 m with 350 m of continuous core. The Mackenzie Delta site was selected after a world-wide search as the best onshore test site for this research with the thickness of hydrates in the Mallik well exceeding 110 metres. Science advice on operational aspects will be provided by the Geological Survey of Canada on behalf of all scientific collaborators and GSC scientists will participate directly in the field work, drawing on expertise developed by the GSC in this field. Enquiries regarding this project should be directed to Scott Dallimore at the Geological Survey. (E-mail: dallimore@gsc.nrcan.gc.ca)

1996 Annual Report Available

Should you wish to receive a copy of the 1996 Northern Oil and Gas Annual Report, please contact Marlene Desjardins at (819) 953-8529 or visit our Web site.

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