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Ottawa ready to kick-start NWT gas hunt"
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Story from Monday's Globe and Mail Report on Business, front page.
http://www.theglobeandmail.com/servlet/story/LAC.20060807.RMAC07/EmailTPStory
Ottawa ready to kick-start NWT gas hunt
Significant policy shift comes after long struggle between First Nations bands
DAVE EBNER
CALGARY -- The hunt for natural gas could resume in the Fort Liard area of the Northwest Territories as the federal government prepares to open land for exploration for the first time in a decade.
It is a significant shift and comes after a long struggle by Chief Harry Deneron of the Acho Dene Koe Band in Fort Liard, who fought anti-development sentiment led by Herb Norwegian, grand chief of the Dehcho First Nations, of which Liard is a part.
"For Harry, he's got much bigger things in mind than just this rights issuance," said Shane Parrish, a consultant who is Mr. Deneron's closest adviser.
The process to issue exploration rights will begin this month, Mr. Parrish said, with two parcels expected to be awarded in January. Indian and Northern Affairs Canada said final approval from Minister Jim Prentice is required but a decision is expected later this month.
The aim is to make such rights issuances routine, as is the case elsewhere in the Northwest Territories and throughout the rest of Canada.
Two huge gas discoveries -- among the top finds in Western Canada in the past two decades -- were made by Chevron Corp. in 1999, and companies actively drilled up to 2004 but lack of new land led to work fizzling recently.
"It's incredibly significant for that area and the industry as a whole, that the North is still open for business," said Nadine Barber, a spokeswoman for Anadarko Canada Corp., which has drilled about a dozen wells in the area and found an undisclosed amount of gas.
Excitement that action could begin quickly is because Fort Liard is already connected by pipeline as a result of its close proximity to northeastern British Columbia, a major area for natural gas drilling.
"The geology does not stop at the border," Ms. Barber said.
While Fort Liard has a pipeline connection, the Dehcho First Nations is the only aboriginal group opposed to the Mackenzie Valley natural gas line to connect the Mackenzie Delta with Alberta. Mr. Norwegian wants to make progress on a land claim settlement with Ottawa first, trying to use his anti-pipeline stance as leverage.
Mr. Deneron, meanwhile, is the only chief in the Dehcho that publicly supports the Mackenzie project, though others are said to be supportive privately. Mr. Deneron fought to open exploration land around Liard but was opposed by others in the Dehcho, until rallying support from two neighbouring communities, Nahanni Butte and Trout Lake.
Mr. Norwegian didn't return a call for comment. Mr. Deneron was on holiday.
The process for exploration land begins with a call for nominations, where energy explorers identify parcels of land within set areas that they'd like to work. A call for bids follows, ending with winning companies making multimillion-dollar spending commitments.
About $20-million was committed to exploration in 1994 and again in 1996 around Fort Liard. The cost to secure exploration rights has soared during the energy boom and, even in the Central Mackenzie and the Mackenzie Delta, which won't have a pipeline connection for at least five years, the figures are high. A record $71-million was committed this year in the Central Mackenzie.
While final approval for the Liard land hasn't been granted yet, an Indian and Northern Affairs official said he anticipates the issuance of exploration rights in the area to become "routine."
"I think it's fairly significant," said Andy Graw, manager of petroleum development for Indian and Northern Affairs in Yellowknife. "It's been a decade working through to where we are today."
Mr. Parrish said Fort Liard wants to see more development following the first round of exploration rights.
"Our intent is to move forward quickly," he said.
Exploration around Fort Liard began in the mid-1950s and three gas pools were found, believed to hold a trillion cubic feet apiece, according to a 2000 paper by Chevron geologist Ken Richards. But the pools didn't even produce a third of the hoped-for gas and exploration ended in the late 1980s and early 1990s.
New technology, including 3D seismic data, "increased the attractiveness of exploration in this rough and remote region," Mr. Richards wrote. Chevron made its giant discoveries in an area where gas was first found by Paramount Resources Ltd. in 1980 but not enough to justify development.
Mr. Richards warned that enthusiasm over Chevron's big successes "must be tempered with some caution," given the tendency of gas fields in the region to fall far short of expectations over the longer term.
Chevron's production, according to statistics for the government of the Northwest Territories, has fallen off sharply, standing in 2005 at about 17 per cent of the level reached in 2001.
In the last three months of 2005, the production rate had plunged further and stood at just 7 per cent of the 2001 rate. Paramount is the only active company in the region, drilling two wells in 2005. The company had planned to lead the drilling of 11 wells this year, but production is expected to slide to the equivalent of 3,100 barrels of oil, down from about 3,900 b/d in 2005, but up from 2,700 b/d in 2004.
http://www.cbc.ca/canada/north/story/2006/07/14/afn-pipeline.html
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