ARCHIVED - Eleven New Exploration Licences in Northwest Territories

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Bulletin
Volume 3, Number 2
May 1996

March and April have been hectic months for exploration groups interested in acquiring exploration licences in the Northwest Territories.

Two calls for bids closed; in the Central Mackenzie Valley and the southern Northwest Territories. Winning bids were selected by the highest amount of money which companies proposed to spend in exploratory work during the first period of the term of the exploration licence. Industry was also asked to post parcels for future bidding in the Mackenzie Delta/Beaufort Sea region. (See Map 1)

Central Mackenzie Valley Call

The Central Mackenzie Valley Call for Bids closed on March 26. Bids totalling $ 9 343 000 have been accepted for the five parcels posted, totalling 375 087 hectares (1444 square miles). These lands lie close to the Mackenzie River northwest of Fort Good Hope and between Norman Wells and Fort Norman, Northwest Territories. The winning bidders and amounts are listed on the attached maps A & B (Area 2),

Southern NWT Call

The Southern Northwest Territories Call for Bids closed on 9 April 1996. Bids totalling $20 317 131 have been accepted for lands totalling 145 257 hectares (561 square miles) in the Fort Liard region. Bids were received on six of eight parcels posted and the winning bidders and amounts are listed on the attached map (Area 1).

Eleven New Exploration Licences

As a result of these calls, a total of 11 new exploration licences were issued in 1996. These bring the total of active exploration licences in the Canadian North to 24 -- three in the Mackenzie Delta-Beaufort Sea region, and the remainder in the Mackenzie Valley and southern Northwest Territories. We welcome Canadian 88, Grand River, Husky, Murphy and Norcen to the expanding group of northern exploration licence holders, joining Amoco, Chevron, Esso, Foxboro, Ocelot, Paramount, Ranger, Shell and Unocal.

Beaufort Sea-Mackenzie Delta Call

The Call for Nominations in the Mackenzie Delta - Beaufort Sea closed April 12 with no nominations.

Beaufort Sea Atlas

The long-awaited Geological Atlas of the Beaufort-Mackenzie Area has been published by the Geological Survey of Canada. The editor must be congratulated on combining stunning photographic reproductions with a wealth of geoscience information. This publication will doubtless be an important information datum for oil and gas companies as they contemplate the timing of the next upswing in exploration activity in thisegion.

Pipeliner Boosts Southern Territories

Mr. Irvine Koop, President of Westcoast Field Services of Calgary recently spoke at the Canadian Energy Research Institute's (CERI) North American Natural Gas Conference (March 1996). His speech highlighted the increasing contribution from the southern Territories and in the longer term, the whole of the North, to Canada's supply base for natural gas.

The following is based on a summary of his presentation.

The southern Territories are an important source for natural gas transported by Westcoast's pipeline into British Columbia for both domestic and export markets. The Westcoast system already extends 50 km into the Yukon and NWT and about 50 million cubic feet per day (1.4 x 106 m3/d) of gas flows to the Fort Nelson Gas Plant in BC for processing. Consequently, southern Territories gas is already an important part of western Canada's supply base. The southern Territories also have attractive potential for future natural gas development. The existing Fort Nelson plant can significantly increase throughput to handle volume increases from new fields developed in this region.

The Western Canada Sedimentary Basin extends from southern Saskatchewan, Alberta and British Columbia into the Northwest Territories and southeastern Yukon. The pattern of exploration to date in the northern part of the basin has been strongly influenced by its geographic remoteness, despite significant potential for both gas and oil. However, the more accessible southern parts of the basin in Alberta have reached exploration maturity and large discoveries are becoming increasingly rare. In recent years attention has turned to the northern parts of Alberta and northeastern BC. Exploration plays in these areas are now being pursued north of 60 degrees.

Westcoast considers that estimates of potential in the southern NWT will increase as knowledge is gained through exploration activity. The company expects a significant volume of the gas resource to be discovered in pools larger than 50 billion cubic feet (1.4 x 109 m3), with the greatest potential lying in the foothills of the southern Territories, which may be comparable to the prolific Monkman area (in northeastern British Columbia) and the Alberta foothills. The southern Territories are currently on production and additional supply can be brought on at reasonable price expectations. In Westcoast's judgement, over one trillion cubic feet (2.83 x 1010 m3), and perhaps several trillion cubic feet of supply from the Territories will be economic at prices up to $2.00 per Mcf (28.3 m3).

The southern Territories are relatively close to existing pipeline systems owned by Westcoast and Nova. The proximity to infrastructure will greatly help develop the area.

Mr. Koop noted that the gas industry will work cooperatively to build opportunities for aboriginal people to participate in businesses that go along with oil and gas development. The industry has done this elsewhere and is confident that it can do so in the Territories.The marked differential this past winter between western Canadian gas prices and the firming prices in the eastern US market has focussed industry's attention on the need to improve continental west-east transport of gas, which will enable growth of exports from western Canada to continue. This bodes well for the development of new supply, including that in the Territories. The potential gas resource in the Territories is large by any standard but its development will be paced by the market. In Westcoast's view, this unquestionably represents a very substantial long term business opportunity.

NEB to release new Southern Territories Gas Study

The National Energy Board is soon to release a working paper on the assessment of geological potential and supply costs for gas in the southern NWT and southeasternYukon. This report describes the results of a cooperative study by staff of the NEB and the Geological Survey of Canada (GSC) to estimate the potential of exploration plays in the southern Territories, and provides estimates of supply cost.

The geological analysis into 23 plays represents one of the most detailed published for the southern Territories to date. Commenting on the petroleum geology, Dr. Kirk Ozadetz (GSC) has remarked that more gas per new field wildcat well has been discovered in the Beaver River Play (Beaver River-Pointed Mountain-Kotaneelee fields) than any other gas play in the Foothills of western Canada. The supply cost analysis indicates that, overall, a trillion cubic feet (2.83 x 1010 m3) of new gas may be exploitable in the southern Territories at less than $2.00 per Mcf (28.3 m3) delivered at the BC border. Copies of the study will be available from the National Energy Board.

Notes and Upcoming Dates...

The Northern Oil and Gas Directorate will be hosting a regulatory workshop in Calgary. The workshop is aimed at those interested in operations in the southern Northwest Territories. An overview of the regulatory environment will be provided with an opportunity for prospective operators to meet and question the regulators. The workshop will be held on June 20, 8:30 to Noon, followed by refreshments and an opportunity for questions. Location is yet to be determined but will be downtown Calgary. Those wishing to attend should contact George McCormick at (819) 953-8491.

CSPG Convention- Booth # 415

The Northern Oil and Gas Directorate will be represented at the CSPG Trade Show June 16-19. Visit our booth, number 415.

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