ARCHIVED - Bidding Opens on 5 Parcels in the Mackenzie Valley, N.W.T.

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Bulletin
Volume 1, Number 5
December 1994

Call for Bids Opens

A Call for Bids for oil and gas exploration rights in the Central Mackenzie Valley of the Northwest Territories is open until April 24, 1995.

The Northern Oil and Gas Directorate is calling for bids for exploration rights to five parcels totalling 526,526 hectares (2,025 square miles).

This Call for Bids is the result of significant response by the industry to the earlier Call for Nominations. It is the first time in 25 years the region as a whole has been opened to new exploration rights.

Successful bidders will be announced and licences awarded in May, 1995. Each exploration licence will confer the exclusive right to drill and test for petroleum. Successful exploratory drilling during the term of the exploration licence entitles the explorer to apply for and receive a significant discovery licence (SDL) or a production licence. An SDL extends the tenure for an unlimited time, or until a production licence is issued.

Exploration History of Parcels

Historical exploration of the Mackenzie and Peel Plains, where all five parcels are located, has shown that the underlying sedimentary basin is a northern extension of the prolific western Canada sedimentary basin (WCSB). Here, as in the WCSB, a Paleozoic miogeocline is unconformably overlain by a Cretaceous foreland basin.

In sharp contrast to the WCSB, exploratory drilling and seismic surveys are sparse over much of the area, dating back to the 1960's and 1970's. Exploration to date has been predominated by the search for another Devonian Kee Scarp reef, the prolific reservoir in the large Norman Wells oilfield. Other plays exist, notably in Cretaceous sandstones with interfingered oil-prone source rocks (for potential play descriptions in the Peel and Mackenzie Plains see Bulletin No. 4).

Four of the five parcels are situated along the Mackenzie River corridor where exploration has been concentrated in the past (see map on next page).

Parcels 1 and 2, in the Peel Plain, are the least explored: no wells have been drilled on either parcel. The Tree River wells some distance to the northwest of the parcels show good porosity in the Devonian carbonate section; flows of sweet gas occurred during loss of well control at Tree River H-38.

Parcel 3, bordering the Mackenzie River, lies some 75 km northwest of Fort Good Hope. The lone well drilled on these lands, N. Circle River No.1 (A-37), tested the Hume Formation. Wells bordering Parcel 3 include Manitou Lake L-61 which encountered a local Lower Devonian pinnacle reef buildup from the Hume Platform (Keg River equivalent).

The Mackenzie River runs over the western half of Parcel 4 before it passes by the community of Fort Good Hope some 30 km to the north. Parcel 4 has been drilled at least four times: tests were run in the Ordovician Franklin Mountain, Silurian Mount Kindle, Lower Devonian Gossage, and Middle Devonian Ramparts.

Parcel 5, some 60 km south of the Norman Wells oilfield, and 70 km west of Fort Norman, has been drilled twice, with tests in the Mid-Devonian Bear Rock carbonates and Upper Devonian Imperial clastics. The East Mackay B-45 well, some 40 km to the east, tested oil in the Franklin Mountain.

Operational Considerations

Four of the parcels border the Mackenzie River, facilitating barging of equipment to exploration sites. The 12 inch Norman Wells pipeline runs south from the field to Zama, Alberta, along the east side of the Mackenzie River, passing some 20 km northeast of Parcel 5. Norman Wells is the major service centre.

Selection of Winning Bids

The bidding is simple, straightforward, fair and competitive. All terms and conditions are specified up front. The term of exploration licences issued for parcels 1 and 2 will be nine years consisting of two consecutive periods of five and four years each. For parcels 3, 4 and 5 the term will be eight years divided into consecutive periods of four years. A single criterion is used to select winning bids. Exploration Licences will be awarded on the basis of the highest bid; the bid is the total amount proposed to be spent doing exploratory work on the parcel during the first period of the term.

The drilling of a well during the first period of the term qualifies the licence holder to retain the licence for the second period, whether or not the total amount bid has been spent.

Rentals are not applied in the first period. A work deposit equivalent to 25% of the amount bid must be submitted by the winning bidder. This work deposit is refunded in accordance with a schedule of allowable expenditures as exploratory work is carried out on the parcel during period one. At the end of period one, any remaining deposit is forfeited.

Winning Bidders in Southern NWT Call

The community of Fort Liard hosted Amoco, Chevron, Ocelot, Paramount, Ranger and Shell, December 8th, to announce these companies as winning bidders for exploration licences in the area of the community. Bids totalled over $22 million for eight parcels.

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