INUVIK
The GNWT's Petroleum Resources Division has issued its first-ever call cycle to energy companies interested in potentially developing lands in the central Mackenzie Valley, the Mackenzie Delta and the High Arctic islands.

Menzie McEachern, the director of petroleum resources for the GNWT, said the newly-created government division has begun its first "call cycle" to energy companies to develop lands in the central Mackenzie Valley, the Mackenzie Delta and the High Arctic islands in the NWT. - Shawn Giilck/NNSL photo

The division, which is headquartered in Inuvik and is part of the Department of Industry, Tourism and Investment, was opened early last summer during the 2013 Inuvik Petroleum Show.

This is the first time the GNWT has controlled the call cycle and bidding process for licences to explore land with potential for drilling. Until the NWT devolution agreement was signed and the division was created, the federal government controlled the process.

The federal government continues to maintain control of the offshore resources.

Menzie McEachern is the director of petroleum resources for the division. During an interview on Oct. 24, he explained how the process works and its significance.

"It's not a bidding process per se, although it may come to that," he said. "This is the first phase related to gas right for onshore drilling in the NWT. It starts off here with nomination for interested companies."

It's a complicated and somewhat arcane multi-step process for companies to eventually obtain any rights or licences to drill.

McEachern said consultation and talks have already occurred with the relevant aboriginal governments whose lands fall in the regions the GNWT is opening up for expressions of interest.

"We've spoken to them and gotten their OK to go forward with the next phase of the process, which is the call for nominations," he said. "What this is is basically putting it out there to industry that we're interested in having a call for bids. If you are interested in certain lands, with petroleum-development potential, then let us know. Nominate those lands and tell us where they are and what you're interested in."

The GNWT will then examine any of those nominated lands to determine whether there is some reason they can't be placed in the bidding process, McEachern said.

"If the nominated parcels look OK, the minister would go to the next phase, which is a call for bids, and that's a 120-day process. Companies then would bid on lands of interest and commit to a certain dollar value of exploration work over the period of the licence."

The GNWT's policy is to accept the highest bid, he said.

"The call process is like a call for interest, while the call for bids is like a request for proposal," McEachern said.

It's going to be a learning process for the division and the GNWT, McEachern said.

"Frankly, we're underexplored still," he said. "There's a lot of work left to do to estimate the amount of resources we have.

"This is our first call cycle, and we're going to try to learn as much as we can going through the process. There's a fair bit for us to learn, and we'll improve the cycle and process for the second going forward. There's always going to be something to learn."

McEachern said it's impossible to predict how much industry interest there will be, if any.

"This is an opportunity for us to gauge industry interested and to understand where we sit in terms of investment attractiveness."

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