Terry Halifax
Northern News Services

Inuvik (May 24/02) - The stakes just got higher in the Northern gas game for four energy companies that aren't part of the Mackenzie Valley producers group.

Last week, the Northern Oil and Gas Directorate awarded exploration permits to Chevron Canada Resources/BP Canada Energy Company and Devon ARL Corporation/PetroCanada for bids on Delta land.

Northern Gas Program Manager for Chevron Canada Resources, Rod Maier, says the new parcel is part of Chevron's long-term plans for Delta exploration.

"The block that we picked up was one adjacent to an exploration licence that we already had, so that was one of the primary attractions to this parcel," Maier said. "We just felt that this fit with our overall exploration position in the Beaufort Delta."

Chevron and British Petroleum are the largest exploration acreage holders in the Mackenzie Delta and this block represents the sixth block Chevron's purchased in the past two years, but no drilling has been done.

"We haven't made any discoveries, mainly because we haven't drilled any wells yet," he said. "We ran an extensive seismic program this past winter, so right now we're assessing the data that we acquired this past winter, with hopes of maturing future drilling prospects."

That data could take weeks or months to determine what resources lie on the land, but he estimates it should take two or three months to be evaluated.

There is a short timeframe from the winter seismic program and when regulatory applications must be filed, so Maier says sometimes application to drill must be made without full confidence of what resources are on the land.

"We are doing that in advance of actually interpreting all of our information," he said. "It's one of the difficulties that we have of working in the Delta along with the logistical challenges."

Shipping south

Being one of the biggest permit holders in the Delta has not guaranteed Chevron can get their product to market.

"We are in discussions with the producers group, who have proposed this pipeline project and how this project may accommodate future volumes from exploration discoveries," Maier said.

The producers would likely seek a long-term commitment to ship a guaranteed volume of gas.

"They will say, 'Well tell us how much room and how much time you need on that pipe and we'll build it for you,'" he said.

"We haven't discovered the gas yet, so we're not in a comfortable position to sign up on a 20-year contract, when we haven't even drilled a well yet."

Maier says with more gas travelling on the pipeline will bring down the unit shipping costs for everyone.

But until a pipeline is built, Chevron and the other stakeholders must adjust their budgets and operations schedules.

"We have to decide how we will pace our expenditures in this region to be able to match that pipeline timing," he said.