INUVIK - News that MGM Energy Corp. will not do any drilling work north of Inuvik this winter has some businesses reeling.

Akita Equtak Drilling employee Johnny Dillon works at an MGM Energy well in 2008. With MGM cancelling plans to drill north of Inuvik this year, Akita's prospects for work this winter are dim. - photo courtesy of Akita Equtak Drilling

"We are not going to drill on the Inuvialuit-owned blocks," said Gary Bunio, chief operating officer for MGM, on Thursday.

"We've been up there for longer than anyone else. We can't afford to spend more money unless there's movement on the pipeline, which primarily just means moving through the regulatory system."

In May, MGM, the last active player in the Mackenzie Delta, gave hints its activity in the Delta would be drastically reduced next year, saying it might drill on two Inuvialuit-owned blocks north of Inuvik. But those plans were always tentative and have now been scrapped.

"It's going to be a slow winter in Inuvik," said Bunio.

Last winter, the company drilled three wells, spending $70 million and employing around 200 people, 40 per cent of them from Inuvik.

"It's been mostly disappointment," Bunio said of industry reaction. "We're the only people who were going to have any significant activity going on this year. Clearly, (for) people like Kurt Wainman with Northwind ... there isn't going to be any other business. Those guys, I would assume, are working on mothballing equipment and making sure costs are covered."

Wainman, owner of Northwind Industries, which supplied 120 workers to MGM last year and relies on MGM for 80 per cent of its annual revenue, said his company will have to shrink its winter staff from 140 to 30.

"There's no work," said Wainman. "There's no pipeline. There's no point. I can go broke slowly."

For his part, Wainman is pointing his finger at the Joint Review Panel, whose much-anticipated report is slated for release in December and will propel the troubled Mackenzie Gas Project into the final stage of its regulatory process under the National Energy Board (NBE). The NEB's review will likely take up to a year.

"I'm sure if there was a positive thing on the pipeline, MGM would go forward. You need money to drill and without a pipeline, there's no point," said Wainman.

"I think it's unfortunate for the future of oil and gas exploration in the Delta," said John Pahl, vice president of joint ventures and business development for Akita Equtak Drilling, which has provided rigs and manpower to MGM in the past. "They're the only game in town and the only opportunity for work in the Inuvialuit Settlement Region."

No other company has announced plans to work in the Mackenzie Delta this winter, or anywhere else in the NWT, for that matter.

Only one company, Paramount Resources, has expressed a desire to drill - but not in the Delta. The Calgary-based owner of the Cameron Hills oil and gas field wants to drill five to eight gas wells at Cameron Hills, but management has yet to sign off on the project. Like Wainman, Pahl is casting his net at the JRP, as well.

"It's not MGM's fault; it's the fault of the lack of a concrete decision on the Mackenzie valley pipeline," he said.

While in previous slow years Akita Equtak could supply rigs to other jurisdictions in Canada and the United States, that's not an option for the company, said Pahl.

"Not this winter. It's slow everywhere. We're in the middle of a recession."