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As steadily as natural gas is pumped from the Kotaneelee field in southeast Yukon, energy is being pumped into other oil and gas activity around the territory. This range of activity not only creates immediate benefits for Yukoners, but also points to long-term benefits from eventual production, including millions in royalties for the Yukon and First Nation governments.
Certainly, one of the brightest prospects lies with Northern Cross Yukon Ltd. This small Calgary-based energy company is the operator of three Significant Discovery Licenses in the Eagle Plain Basin, not far from the Dempster Highway. Three wells with discovered oil reserves have piqued the company’s interest.
“We think there’s an opportunity to take oil resources that are adjacent to the highway right from the raw product in the ground to end-use consumption, all within the Yukon,” says company president David Thompson. “And that’s an opportunity to provide jobs, employment, royalties—those sorts of economic benefits—to people in the Yukon.”
In the past, Northern Cross spent about $2.5 million—much of it on local goods and services—to produce a few hundred barrels of test crude. The company also studied the feasibility of upgrading this crude into basic petroleum products at a Yukon facility. Unfortunately, market conditions didn’t support further work.
“At the time we did our test in 1998, the Yukon economy was shrinking and the Faro mine shut down, so we were looking at a much smaller market,” Thompson recalls. “But our feeling now is that the market is getting bigger. There seems to be more activity in the mining sector and a greater demand for fuel in a growing economy. Also, the price of fuel has gone up, which helps with the economics of the whole enterprise.”
As a result, Northern Cross is now looking to revive the project.
“We know what we would like to do,” Thompson says. “But we have to have further discussions with stakeholders in the Yukon, including the First Nations, before we proceed with even making applications.”
The Hunt Oil Company of Canada is another Calgary-based player with plans for upcoming Yukon activity. Unlike Northern Cross, which has established oil reserves, Hunt has plans to explore for new natural gas deposits in a 4,200-hectare area that is tantalizingly close to the proposed Mackenzie Valley pipeline.
.“Hunt Oil has an application before us to conduct a 3-D seismic survey on their disposition in the Peel Plateau and they expect to start that in late January of 2006,” says John Masterson, director of the Yukon government’s Oil and Gas Management Branch.
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“There’s likely to be some training and employment to come out of this project as well as opportunities for the supply of goods and services.”
When it is made public, the results of Hunt’s exploration will help to contribute to a clearer picture of the Yukon’s mostly unexplored oil and gas potential. The data may be able to confirm the potential identified in resource assessments done by the Geological Survey of Canada and Yukon government’s Geological Survey (YGS).
Just this April, YGS got in on the oil and gas action when it assumed primary responsibility for providing information about the hydrocarbon potential of the Yukon’s mostly unexplored sedimentary basins. These ongoing efforts should help attract more companies like Hunt Oil and Northern Cross.
“We’re just getting up to speed,” chief geologist Grant Abbott explains. “We’re hoping to hire a couple of petroleum geologists to give us the capacity we need to deal with oil and gas activity.”
In the meantime, YGS has been busy in the field with the collection and analysis of baseline data that will help generate and support increased oil and gas activity.
“We’ve been doing some mapping and seismic studies and other work to try and get a better understanding of the potential of the Whitehorse Trough,” Abbott says. YGS hopes to release the results of this work late this fall.
The work being done by YGS, and the work being done by companies like Hunt are contributing to the growth of Yukon’s oil and gas industry.
“The moderate oil and gas activity in the territory presents us with a real opportunity,” Masterson concludes. “Yukoners can begin to build their capacity and knowledge with respect to oil and gas—to understand what this industry’s about, how it performs, how it functions, and what it means – before the industry really takes off.”
The Yukon government is also taking this opportunity to develop Best Management Practices for Yukon’s oil and gas industry. These practices will help to establish high environmental standards and reduce the footprint of development on Yukon’s landscape.
All things considered, the activity in the Yukon is expected to grow with the construction of a pipeline. Pipelines will provide the critical link needed to get Yukon gas to market.
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Last Updated 29-09-2005
