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INUVIK
Inuvik Gas may have a solution to its expected natural gas shortage, if talks with ConocoPhillips go as planned.

Parson's Lake, located 75 km northeast of Inuvik and owned by ConocoPhillips, has enough natural gas to heat all the houses in Canada for two years. Inuvik Gas hopes to drill into one of ConocoPhillips' reservoirs for natural gas for the town. - photo courtesy of ConocoPhillips

Inuvik Gas has approached the international oil and gas company to use a reservoir of Parson's Lake, located 75 km northeast of Inuvik. Inuvik Gas has less than a year and a half worth of gas remaining in its well and needs a new, long-term gas supply.

"We got a response back that they're willing to consider giving us access, but not willing to put up the capital for the project," said Patricia Newson, senior vice-president of AltaGas Ltd., an original partner in Inuvik Gas. "They're willing to have the project occur on their land to give access to the gas, but they want to review a project plan."

According to Rob Evans, director of external affairs for ConocoPhillips Canada, no decisions have been made yet and won't be until the business plan has been seen and approved. ConocoPhillips wants to see a description of production, transportation, expected cost and schedules among other things to ensure the project will be safe for people and the environment.

"It's a very complex process and we need to see specific detail before a decision is made," Evans said. "That info should be done at the end of the month."

Inuvik Mayor Denny Rodgers is excited about the potential of the project, but also wants to know that the town will have a secure source of natural gas in the foreseeable future.

"It's good news, but the decision will be based on the business plan," Rodgers said. "We're the customers that they can sell the gas to, so I bring the town's voice. We'll have to find out what the new rates will be."

Inuvik Gas has yet to recoup the $50 million of capital invested in the Ikhil gas well it's currently using, which had been expected to have enough gas for 20 years. Now, nine years short of the original contract, the well has only an estimated year and a half of gas left, unless its largest customer, the Northwest Territories Power Corporation, switches back to diesel.

Consultants are working with the Ikhil Joint Venture to create the plan for drilling at Parson's Lake. Before drilling could even happen, Inuvik Gas would need to build a 25-km pipeline to meet the original pipeline and figure out how to process the gas, which may have a different composition from the gas at Ikhil, which is nearly 100 per cent methane gas.

"If there are natural gas liquids, it would be an engineering problem to go through the pipeline or to change the process," Newson said. "We're working with consultants on how the project might be engaged and what the cost might be."

There's no estimate yet on how much the project could cost or what the natural gas rates will be once the project is complete, though Newson hopes it will be cheaper than diesel.

The hope is to start drilling in the 2012-13 winter season if everything comes together quickly. The work can only be done in the winter with the use of ice roads, which have to go all the way to Parson's Lake.

"We want everyone to know that we're taking this seriously and working hard," Newson said. "As we get more information, we'll do what we can to share it."

Over the past 12 years since Inuvik Gas started providing natural gas to the community, customers have saved $31 million. Compared to what they would have spent on diesel Inuvik Gas has more than 900 customers.

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