Gas project headaches
IPC's $1.5 million test almost write-off

by Glenn Taylor
Northern News Services

INUVIK (Mar 03/97) - The manager of a gas well testing project near Inuvik is breathing a little easier this week.

Jim Herbert of Inuvialuit Petroleum Corporation (IPC) is leading a $1.5 million testing program of a natural gas discovery near Inuvik. The corporation hopes the test will confirm whether Ikhil -- discovered by Gulf Canada in 1986 -- has enough natural gas to justify a pipeline project to Inuvik.

IPC reopened the abandoned well February 20, using a testing rig to grind through cement and steel plugs set at intervals down the shaft. But after a few days, riggers encountered a blockage in the well that stopped the work cold.

An obstruction was encountered at about 69 metres from the surface, and could not be penetrated by the drill bit. A trouble-shooter (a "fisherman" in industry jargon) and a special tungsten drill bit were dispatched from Calgary to tackle the problem.

Computer testing later confirmed the blockage was caused by the collapse of metal casing inside the hole. A hole that should have been more than six inches wide was less than three inches, said Herbert. It appears the push and pull of permafrost may have pinched the casing inside the hole.

Herbert had worried earlier last week about how bad the casing had corroded and collapsed. The testing project could not have gone ahead if the casing was too damaged, because it would not be able to handle the rigors of a high pressure gas test, said Herbert. Further, the National Energy Board officials would have nixed the plan on safety grounds.

Herbert is satisfied now that danger is behind the project. He said IPC and the NEB have both agreed the integrity of the hole is good enough to continue drilling to the 1,130 m mark (where the gas is) and begin the test.

Ikhil was drilled in 1986 by Gulf Canada, looking for a world class gas discovery. Ikhil was pitifully small by industry standards, but a cursory 45 minute test by Gulf showed the well likely holds enough gas to supply Inuvik with a 20-year supply of gas, if not more. Herbert and crew are here to do a proper test to confirm whether that's true. "We're relying on a test that was done for 45 minutes 12 years ago," said Herbert. "We need better information than that."

If the test comes back positive, IPC chair Russell Newmark said a pipeline project to Inuvik is virtually assured.

IPC has been considering the $23 million project for more than two years now. It purchased a 73 per cent stake in Ikhil from Shell Canada Ltd., which bought the discovery from Gulf in 1991. The reservoir is located about 30 km. northeast from Inuvik.

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

A processing plant would be built at the production site to separate water and other liquids from the gas.

Once Ikhil is depleted, Newmark said the plan would be to select another nearby gas field and begun 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 project would pump millions of dollars into Inuvik's economy.

Newmark said the project would reduce power bills for Inuvik residents and businesses 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," said Newmark. "This will provide an economic shot in the arm to the region."