ACHO DENE KOE/FORT LIARD - Paramount Resources Ltd. has announced it is suspending its natural gas operations in the Fort Liard area.

The closure could result in the loss of approximately $4.1 million for Northern businesses and approximately 1,500 working days for companies contracted to provide services to Paramount, said Shirley Maaskant, the manager of regulatory and community affairs for Paramount.

The K-29 well site outside of Fort Liard is one of the sites at which Paramount Resources Ltd. suspend activities, other sites have already been selected for temporary closure. - photo courtesy of Paramount Resources Ltd.

Low natural gas prices, few new gas finds and a lack of new lands opening up for exploration are the main reasons that the company is suspending operations, said Maaskant.

The company has already made the decision to suspend operations in the area north of Fort Liard that Paramount refers to as Liard West.

"It's no longer economically viable to produce in Liard West," Maaskant said.

The two key well sites in the area and the Liard pipeline will be temporarily suspended, a process that is also known as mothballing.

Paramount is also considering suspending operations at their three wells and the Shiha pipeline in the area south of Fort Liard that Paramount refers to as Liard South.

The area was brought into production in 2000, but gas production hasn't been as high as the company expected, she said.

During the winter Paramount will be bringing a service rig in to work on existing wells in the hope of finding more gas to produce.

Depending on the results, which should be available in February, operations in the area could also be suspended this winter, she said. Temporary suspension follows a process laid out by the National Energy Board (NEB).

Paramount has also drilled wells in an area east of Fort Liard but none was ever brought to production.

The company has no plans to drill more well bores in that area, said Maaskant.

Although the sites are being temporarily suspended they could be brought back into production if factors change, Maaskant said.

The wells would have to be economically viable with the income from the natural gas being higher than the cost to produce it.

A reasonable profit would be necessary, she said.

"There's not a magic formula," she said about where levels would have to be for production to resume.

Paramount has also considered the lack of progress in the Dehcho land claims process and the inconsistency in how lands are being opened, Maaskant said. The company knows that Fort Liard is trying to resolve the challenge of opening lands, she said.

"We know Fort Liard is very interested in development," said Maaskant.

If Paramount suspends all operations in the area Maaskant said Northern businesses, which include ones based in Fort Liard, will lose approximately 1,500 days of work a year. Services offered by Northern companies include supplying heavy equipment and camp and catering services.

Last year Paramount paid $4.1 million to Northern businesses, which will also be lost, she said.

Acho Camps and Catering is one of the companies that will be affected by the suspension.

For a number of years Acho Camps and Catering has supplied Paramount Resources with a cook at their location and that position will be lost, said Brad Giroux, the general manager of the company.

On a larger scale, the company will also lose the opportunity to provide Paramount camp services both in the territory and in Northern British Columbia, Giroux said.

"It will have a definite effect on Acho Camps and Catering," he said.

The suspension is also expected to affect other groups ranging from Beaver Enterprises Ltd, which supplies heavy equipment, to hot shot drivers who move supplies in and out for the company.

"It does have an effect on everybody," he said.

Because Paramount has stated that the sites could be reopened if conditions change, many businesses are hoping the work will return.

"We're hoping it's just a short term thing," said Giroux.