Energy production in Canada's NWT set to boom: minister
Houston (Platts)--5Dec2012/558 pm EST/2258 GMT
Energy production in Canada's Northwest Territories is on the cusp of a
boom, with an oil and gas resource base that rivals some of the world's most
prolific energy producing regions, according to David Ramsay, NWT's minister
In the coming years the Arctic waters of the Beaufort Sea, which lies
northwest of the NWT, "could rival the Gulf of Mexico in both oil and gas
production," Ramsay said in a Tuesday interview.
Ramsay, who was in Houston to speak at the three-day Arctic Technology
Conference, added that current estimates indicate that in addition to its
offshore energy bounty, there is potentially 81 Tcf of gas and almost 7
billion barrels of oil waiting to be developed in the NWT onshore.
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"We see a real opportunity in the central Mackenzie Valley for shale
oil," he said. A number of international and Canadian energy companies,
including ConocoPhillips and Husky Energy, have expressed interest in
developing the resource, Ramsay said.
The NWT has leased 13 large parcels of land in the region to
exploration and production companies for C$632 million (US$637 million), he
"We've advanced the planning on a proposed winter program at Slater
River, which, if approved, would include the construction of an all-season
road and further evaluation of the two vertical wells we drilled in the first
quarter of this year," Husky spokeswoman Kim Guttormson said Wednesday.
Husky COO Rob Peabody, addressing Husky Energy's Investor Day conference
Tuesday, said of the central Mackenzie Valley play, "We know the hydrocarbons
are there -- but this is a difficult operating environment, it's remote and
we have our work cut out for us. It's early days and we will proceed
In addition to the central Mackenzie Valley region, Ramsay said NWT
officials also are excited about the prospect of opening up a new oil shale
play in the southwestern corner of the territories, which he said could
potentially "rival the Bakken in terms of size."
REMOTENESS CREATES CHALLENGES
Ramsay pointed out to attendees at the ATC that although the NWT covers
a huge region, it is a largely unpopulated and inaccessible region.
"The area of the NWT is nearly 520,000 square miles -- which is about
twice the size of Texas but a tad smaller than Alaska. But unlike Texas, our
population is only 43,000 people scattered throughout a number of small
communities," he said.
NWT has lagged behind other parts of Canada in terms of oil and gas
production for a number of reasons, not the least of which is the remoteness
of the region and the lack of infrastructure to transport its oil and gas to
national and global markets, a problem Ramsay readily acknowledged.
"You don't have to look any further than the Mackenzie gas project. We
face that reality, the difficulty of getting our resources to market," he
For years, territorial officials had pinned their resource development
hopes on the construction of the long-proposed Mackenzie Gas project, a
1.8-Bcf pipeline that would transport Arctic gas to markets in southern
Canada and the US.
However, in recent years, with the phenomenal growth of US shale
production and the subsequent collapse of North American gas prices, the
prospects that the Mackenzie Valley line will ever become a reality have
Earlier this year, Ramsay attempted to keep the project alive, when he
floated the idea of reversing the flow of the proposed Mackenzie pipeline,
enabling it to ship gas north to the coast of the Beaufort Sea, where it
could be liquefied for shipment to markets in Asia as LNG.
Development of the shale oil play in the central Mackenzie Valley should
be aided by an already-existing oil pipeline, which will provide "some
capacity" for taking the initial crude oil production out of the region,
"Once the oil shale gets into commercial production there may be another
oil line built south from Norman Wells," he said.
In addition, the development of the oil shale in the region is also
expected to result in the production of large volumes of associated gas. As a
result of the need for new gas infrastructure to get this gas to a market,
the question over the economic viability of the Mackenzie gas line "may come
into much sharper focus," he said.
Ramsay added that the territories' long-held hopes of being able to
develop its energy resources are getting closer to becoming a reality, with
NWT set to finalize an agreement with the Canadian federal government next
April that would give NWT negotiating rights for onshore energy projects.
Under Canada's constitution, the 10 provinces own and control
development of their natural resources, but Ottawa has the final power to
approve projects in the three northern territories -- NWT, Yukon and Nunavut
-- returning some of the royalties and taxes through transfer payments.
Although the initial agreement would be confined to onshore resources,
NWT officials hope the deal will open the way to extending terms to the
offshore Beaufort Sea, similar to agreements the Canadian government has with
Newfoundland and Nova Scotia.
--Jim Magill, email@example.com
--Edited by Lisa Miller, firstname.lastname@example.org