Glen Korstrom
Northern News Services

INUVIK (Mar 19/99) - They go where the money is.

This is Inuvialuit Petroleum Corporation chair Richard Newmark's take on whether major oil companies will invest in the Mackenzie Delta to tap its colossal natural gas pools.

To indicate that there is interest in the south in gas pools outside the soon-to-be-tapped Ikhil well, Newmark says he has taken some oil company representatives on tours of the Delta in the past few weeks.

"We're not there yet but I think there is reason for some optimism and the economics are turning around," he says.

"For major oil companies, a decision like that will not be made in Calgary, it'll be made in New York or wherever. They'll ask 'Do we want to invest $3 billion or $4 billion? And is it a better investment to put it in Indonesia or Africa or the Gulf of Mexico?'"

The Delta's natural gas pools are well known, particularly the untapped Taglu site, which Newmark believes is the largest pool of gas in North America outside Prudhoe Bay in Alaska.

And even though the plan is for gas from the Ikhil site to heat Inuvik for the next 20 years, Newmark estimates there are 200 times that amount of gas in other pools in the Delta.

"What's changing the situation is the overall price of gas and the supply and demand situation in North America. That's what's causing the bigger companies to discreetly and quietly look at this again."

Newmark says the price of gas is going up in the south, thereby making the market inherently more viable. Combined with this development is how required pipeline lengths are shortening at the same time as technology is improving.

"In 1989 the companies came forward and did gas export licences. At that time if they had built a pipeline they would have had to have built it all the way to Caroline (Alberta, near Edmonton,)" says Newmark.

"Now they probably only have to build it to the NWT border."

A Northern gas pipeline to the south could also piggy back on gas projects in Alberta and northern British Columbia that are getting under way.

But the fundamentals of a project are the same regardless of its size.

Companies look at how much gas they can acquire, what their capital and operating costs could be and whether there is a secure market for their product.

How much risk companies are willing to shoulder determines their likelihood of jumping off the mark.

Newmark hints that because of the Ikhil project, companies are able to get an accurate look at what some of the capital costs -- such as the Trencor pipeline digging machine -- are likely to be so they are therefore better able to make informed decisions.

"Maybe instead of a billion dollars (their capital costs could be) $750 million and then they plug those numbers into their formulas and it looks a little better," he says.

"So from my perspective I would be more optimistic today than I would have been two or three years ago."

If a gas pipeline to the south continues to be a pipe dream, Newmark's next suggestion for utilizing Delta gas is to connect the communities of Tuktoyaktuk and Aklavik.

"So far there have been no finds near Paulatuk or Sachs Harbour."