Hay River (July 21/03) - It has been a year of mixed results for Paramount Resources well-publicized Cameron Hills oil and gas project.

"We've had some successes and some setbacks, which is to be expected in any project of this nature," said Paramount's Lloyd Doyle during an open house in Hay River Monday.

"It just goes to show how unpredictable oil and gas exploration can be."

During the winter, Paramount began extracting oil from the site for the first time thanks to five newly connected wells.

It also opened three new natural gas wells, doubling the number in operation.

But Paramount also ran into several problems, including a number of wells that turned out to be duds.

In particular, Doyle said the company expected two northeastern wells to be connected to a large reservoir of oil. As it turned out, they weren't and all the company found was water.

"The reserves are 1,400 metres underground, so unfortunately you never really know what you have until you dig the well," said Doyle. "It's actually an inexact science."

The company has also been brought before the Mackenzie Valley Environmental Review Board over concerns about the size of the project.

"There is some worry among environmental groups about the scope of Cameron Hills," said Doyle. At it's height, he added, the project could include as many as 55 wells.

Under it's current deal, the company is allowed to dig five more wells, but Doyle said the project may have to be put on hold until the environmental concerns are addressed.

"We're not sure yet if there will be more drilling in the immediate future."

Because the case is still before the board, members can't comment on the details of the review.

"(But) it's not uncommon for a company to re-appear before the board," said Roland Semjanovs, the Mackenzie Valley Environmental Review Board's communications officer.

"When additional development is proposed, the situation has to be reassessed," he said.

Despite the setbacks, Doyle said Paramount is pleased with the progress at Cameron Hills. The facility funnels 750 barrels of oil and 10 million cubic feet of natural gas to a processing plant in Bistcho every day.

"The results have been encouraging,"said Doyle. "We haven't got our money out of it yet, but hopefully we will in a few years."

Paramount has spent $40 million on the project over the last two years and a lot of that money has gone into the Hay River economy.

"It has meant a lot of work for people in Hay River," said Shawn Carter, whose company, Carter Industries, was responsible for clearing forest and building roads around the property.

"We buy things like fuel and other supplies locally so it definitely helps the community."

Doyle expects Cameron Hills to be productive for the next 15 to 20 years, but he cautioned there's no way to be certain.

"Unfortunately, seismic instruments only let you see underground structures, not the actual oil and gas itself. "So it's hard to know how much is down there. We have no way of being sure that we'll get our money back. But that's the nature of the business."