Beaufort Sea: The Northwest Territories’ new energy play? – by Yadullah Hussain (National Post – April 12, 2013)

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The Beaufort Sea may soon see oil drilling activity as the Northwest Territories tries to pry open yet another resource front in a bid to attract oil and gas companies.

“In the near term you will see an application to drill,” said David Ramsay, Minister of Industry, Tourism and Investment for the Northwest Territories. “And I would expect that would come sooner rather than later. I have talked to a number of companies that have leases in the Beaufort — there has been some seismic work that took place last summer.”

To date, the Northwest Territories has been more about potential rather than gushing commercial production, but the conclusion of devolution talks with the federal government in March gives the government in Yellowknife provincial powers and a fresh impetus to take control of its destiny — and its resources.

“It means that the NWT government will be making decisions on land, water and resource management in our territory,” the minister told the Financial Post. “And those decisions will be made by elected officials here in the NWT instead of Ottawa by April 2014.”

Barely in the driver’s seat, NWT is looking to attract Asian companies into the region.

“Premier Bob McLeod was in China late last year. We are also giving a presentation to the Canadian-Chinese Chamber of Commerce business leaders in Calgary next week, so we are anxious in seeking investment from China and other countries in Asia,” Mr. Ramsay said.

While Ottawa will retain control of offshore activities, the NWT government will start negotiations on revenue-sharing 60 days after the final devolution agreement.

But NWT’s Beaufort push may see a fair bit of resistance. A National Energy Board review last year on Arctic drilling laid out strict criteria for explorations.

“There is no upper limit on the amount that we may require as proof of financial responsibility from a company,” the NEB said in its review.

Royal Dutch Shell PLC’s grounding off a drillship in the nearby ChuckChi Sea may also give companies a bit of a pause before they embark on an Arctic venture.

While Mr. Ramsay is conscious of responsible resource development, he remains confident of the prospect. “The resource in the Beaufort Sea could rival that of the Gulf of Mexico.”

BP Canada Energy Co. has a joint venture with Imperial Oil Ltd. to explore two offshore licences in the Beaufort. The British major also holds two additional blocks independently and is currently evaluating options on its exploration licences.

Chevron Corp. also has two exploration leases offshore. Meanwhile, Franklin Petroleum Ltd., a small U.K. operator was also handed a controversial license last year, with critics doubting its technical expertise and financial muscle to explore the treacherous Arctic waters.

Regulatory progress in the NWT has been no less treacherous, as last year MGM Energy and partner Shell withdrew a horizontal well application to drill in the promising onshore Canol shale play, when the authorities sent the application for environment assessment. MGM drilled a vertical well earlier this year in the 10-billion barrel play, but the early results have not impressed analysts.

For the rest of this article, click here: http://business.financialpost.com/2013/04/11/beaufort-sea-nwts-new-play/

 

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