Doug Ashbury
Northern News Services

Fort Liard (Jan 24/00) - Chevron Canada Resources' recent investment into the natural gas development in the Liard region could be a pipeline to future projects.

The Liard project is significant because it "builds towards other things," said Chevron Canada president Jim Simpson.

"We're gaining experience, building relationships. It's a chance to do things right," he said, adding that "in the scheme of things, it's not a grand project. It's significance -- it's a stepping stone to us going North."

Over the next few months, Chevron Canada plans to build a 32-kilometre natural gas pipeline north of Fort Liard. The pipeline would connect the Chevron and partners K-29 well with Amoco's plant at nearby Pointed Mountain.

The area is rugged and expensive and tricky, said Simpson. The geology is fractured and folded and that means there are places for the gas to escape.

By today, Chevron Canada may have received water, leave to construct, and land use permits to build the pipeline. Oil and gas permits are issued by DIAND or the National Energy Board.

Simpson, boss of San Francisco-based Chevron Corp.'s Canadian unit, was in Fort Liard last Tuesday to welcome U.S. Ambassador to Canada Gordon Giffin, U.S. Consul General Lisa Bobbie Schreiber Hughes and other officials touring the natural gas developments.

The trip was organized by NWT Commissioner Dan Marion's office. The group flew from Yellowknife to Fort Liard aboard a Canadian Forces 440 squadron Twin Otter.

"For us, it's a giant step. I know other aboriginal groups are watching. It has been good for us," Fort Liard Chief Harry Deneron said of the pipeline.

"In exchange for development, we put a protected area around Fisherman Lake," he said.

Negotiating with people who lived around the lake was difficult, he adds.

In fact, the pipeline route was changed twice after talking with local residents.

Chevron was the first company to give Beaver Enterprises, a band company, the chance to be the primary contractor for some of their road construction work, Deneron added.

Later this week, Deneron is hosting a meeting of 40 NWT aboriginal leaders to discuss pipeline and oil and gas developments.

During the building of the pipeline in February and March, about 300 construction workers will be employed. The plan is to finish work at the end of March. A year from now, there will only be a handful of Chevron people operating the field.

The $21-million pipeline will connect the K-29 well, located in the Franklin Mountains, with Amoco's plant at Pointed Mountain. The west coast pipeline runs from Amoco's plant south to Fort Nelson, B.C. Gas is expected to flow through the Liard pipeline for at leat 10 years.

Another $79 million was spent on seismic work, drilling associated with K-29 and M-25 natural gas wells, access roads, camp operations and other related support systems.

Simpson described test numbers from M-25, released last Tuesday, as "highly successful and exactly what we wanted."

M-25, just south of K-29, could be in production in fourth quarter of this year.

Drilled at a cost of $9 million, M-25 could produce between 50 and 75 million cubic feet of raw gas per day.

K-29, expected to produce 75 million cubic feet per day, is among the richest gas discoveries ever found in Canada. It remains to be determined if M-25 and K-29 wells are tapping into the same pool of natural gas.

As for bringing the project to the brink of construction, Simpson described it as "difficult but not acrimonious."

Ideally, Chevron Canada would now like to see access to more land. If other natural gas pools are found, the company could then take its Fort Laird experience and apply it to other NWT communities.

"We're not demanding huge amounts of land be opened up. There's not very much land we can access now," he said.

Simpson added that for Chevron Canada, the licence area north of Liard is pretty much exhausted when it comes to exploration. But demand for natural gas will continue to grow.

Gas from the Liard region will likely end up being used south of the border.

U.S. demand for natural gas is expected to hit 90 billion cubic feet per day by 2010. North America currently produces 65 billion cubic feet of natural gas per day. Canada supplies about 15 per cent of U.S. natural gas needs.