Stephan Burnett
Northern News Services

Inuvik (Sep 08/03) - Devon Energy is taking time to pause while deliberating the costs of operating in the North.

To date, Devon has punched six holes in the Delta at an average price of $20 to $30 million per hole.

At only 3,000 to 3,500 feet per hole, the higher cost is not due to depth, but rather a complete lack of infrastructure, said Michel Scott, Devon's vice president of frontiers.

In the Mackenzie Valley, Devon has 450,000 net acres and in the Beaufort Sea, Devon has been the top bidder on 850,000 acres.

With hundreds of millions already invested in the Delta and Beaufort, bystanders might think a company like Devon would be chomping at the bit for the Mackenzie Valley Pipeline to get underway.

That's not the case, said Scott.

Scott explained that the cost of doing business in the Delta and the Beaufort is considerable -- some might say astronomical -- by southern comparisons, where rigs routinely drill at $1 million per hole.

Even though the Beaufort and the Delta account for nearly 60 trillion cubic feet of natural gas -- close to $400 billion in today's gas-price revenue -- companies are beginning to take a sober second thought over the cost of operating in the North, he said.

If construction on the Mackenzie Valley Pipeline starts within the next 18 to 24 months, best estimates are that no gas will arrive at the Chicago hub prior to 2009, said Scott.

In the Beaufort, gas won't get to the market prior to 2012 or even 2015, he said.

"We don't want to create a hub bub and we don't want to over blow expectations," Scott said.

"We need to see more signs that the pipe is going ahead prior to making additional exploratory commitments."

Scott also aired concerns over whether the Mackenzie Valley Pipeline will be large enough or built with enough room to take on the future capacity of the Beaufort.

At the same time, Devon has it's eye on the prize.

One of the wells Devon has drilled has been rated in the 200 to 300 billion cubic feet range, potentially bringing in $60 to $80 million per day, said Scott.