by Doug Ashbury
Northern News Services

NNSL (Dec 15/97) - More than two decades after massive exploration to find Mackenzie delta energy resources, the first commercial deal has been signed to bring a natural gas field into production.

Under the deal, Inuvialuit Petroleum Corporation will supply natural gas to NWT Power Corp.'s Inuvik plant.

NWT Power estimated capital costs at $30 million.

The natural gas will be supplied from the Ikhil gas field located 45 kilometres north of Inuvik.

The project will mark the first production of natural gas in the Canadian Arctic.

The deal signed Thursday, commits Inuvialuit Petroleum and its partner, AltaGas Services, to supply NWT Power Corp. with natural gas for its facilities for 15 years commencing July 1, 1999. For its part, NWT Power agrees to purchase the gas.

Inuvialuit Petroleum is owned by the Inuvialuit Regional Corp. of Inuvik.

The contract also includes a pricing mechanism which ensures "natural gas is supplied at a significant discount to diesel," NWT Power Corp. said.

Based on energy demand surveys, it is estimated consumption by the NWT Power Corp. represents about one-third of Inuvik's total energy demand.

The corporation said it will convert power generation facilities to use natural gas in time for the initial delivery date.

The agreement "will also allow NWT Power Corp. to reduce the cost over time, of electricity to Inuvik's residents by up to 20 per cent over 15 years, and greatly enhances impact on the environment," Power Corp. CEO Leon Courneya said.

And it represents a significant commitment of capital and effort by the Power Corp., he said.

Inuvialuit Petroleum chairman Russell Newark said the deal will generate local employment, training and business opportunities.

The project involves drilling two or three wells and construction of a 45 kilometre buried gas pipeline as well as an in-town distribution system.

Inuvialuit Petroleum and NWT Power Corp. will be filing applications with the NWT Public Utilities Board to set gas and power rates.