IPC will risk $1.5 million

by Glenn Taylor
Northern News Services

INUVIK (NOV 011/96) - Inuvialuit Petroleum Corporation (IPC) will risk $1.5 million this winter to test the Ikhil natural gas reservoir.

The test will determine whether Ikhil - discovered in 1986 by Gulf Canada - has enough gas to supply Inuvik's energy needs for at least 20 years.

If it does, IPC chair Russell Newmark said a pipeline linking Inuvik to the reservoir would be virtually assured. If it doesn't, IPC will have lost $1.5 million.

The company has been considering the $23-million pipeline project for two years. It purchased a 73-per-cent stake in Ikhil from Shell Canada Ltd., which bought the discovery from Gulf in 1991.

Located about 30 kilometres northeast of Inuvik, Ikhil is thought to hold between 20 and 40 billion cubic feet of gas. IPC needs at least 25 billion -- Inuvik's projected 20 year supply -- to make the pipeline project viable.

The corporation must first spend $1.5 million on precise testing to confirm the size of the reservoir.

Ikhil was considered a disappointment for Gulf when it drilled the reservoir in 1986. Looking for much larger fields, Gulf performed only a few minor tests before abandoning the site.

Newmark said IPC has acquired a test rig for the work, which will be hauled up in six trailer loads in February. A five-kilometre overland ice road to Ikhil will be built in early February.

The rig will be erected in late February for two weeks of testing. While flaring off the gas, IPC will test flow rates to determine the size of Ikhil.

After the rig is removed, testing equipment will remain on site for another month to further study the reservoir.

Up to 30 people will be hired to do the job.

If the test succeeds, Newmark said IPC or another investor would spend $6 million to drill two production wells. Another $15 million would be invested to build a pipeline and processing plant. Newmark said a number of investors have already shown interest in the pipeline project.

The processing plant would be built at the production site to separate water and other liquids from the gas. A plastic pipe five to 10 centimetres wide and buried most of its journey one metre underground would transport the gas.

Once Ikhil is depleted, Newmark said, the plan would be to select another nearby gas field and begin tapping that site.

It's a risky venture for the corporation, but Newmark said the positive spinoffs for the region are considerable.

The project would create employment and business opportunities for beneficiaries and "provide an emotional and psychological boost for oil and gas," said Newmark.

"This will show that small-scale projects are viable in the North. We don't have to wait for mega-projects to occur."

Newmark won't be the only one crossing his fingers during testing this winter. A pipeline would pump millions of dollars into Inuvik's economy.

Newmark said the project would reduce power bills in Inuvik by up to 25 per cent. The gas supply could also make way for other experiments in the snow, like powering vehicles on natural gas.

"This is the kind of thing aboriginal corporations should be doing," he said. "This will provide an economic shot in the arm to the region."

IPC's largest potential customer -- the NWT Power Corporation -- is also interested in the pipeline. "It works all the way around for us," Bill Braden, director of corporate development, told the Drum earlier this year. "We'd be happy to make it happen."

Braden said the corporation would wait for the test result before making any firm commitments. "Once that's been finished, we can get down to negotiating this deal," Braden said.