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Inuvik Gas project on hold
Plan in to ConocoPhillips; waiting on power corp. switch to diesel

Samantha Stokell
Northern News Services
Published Thursday, December 1, 2011

Inuvik Gas partners have submitted a proposal to ConocoPhillips to drill a new well and pipeline before the current natural gas well runs out well ahead of schedule.

NNSL photo/graphic

The potential drilling site for the second Ikhil natural gas well. Inuvik Gas partners have submitted a proposal to ConocoPhillips to drill a new well and pipeline before the current natural gas well runs out well ahead of schedule. - photo courtesy of Ikhil Joint Ventures

ConocoPhillips received the proposed project implementation plan (PPIP) at the beginning of November and are reviewing Inuvik Gas' plan to drill a new natural gas well at Parson's Lake to meet the natural gas needs of Inuvik. According to preliminary reports, Inuvik Gas has less than two years worth of natural gas in its current reserve.

"They're taking (the plan) seriously. If they thought we were crazy they would have said 'no' by now," said Patricia Newson, vice-president of AltaGas Utility, one of three partners of Ikhil Joint Venture, which owns Inuvik Gas. "(ConocoPhillips) pulled together a team because they had disbanded the Parson's Lake technical team, to look at the PPIP. They've been working steadily and we've been getting calls from time to time."

ConocoPhillips director of external affairs Rob Evans confirmed that the project plan had been received, but noted that no decisions have been made and that discussions continue.

The proposed plan would see Ikhil Joint Venture, which sells gas to Inuvik Gas and the Northwest Territories Power Corporation, drill a new well and build a new pipeline, and possibly a processing plant, from ConocoPhillips-owned Parson's Lake. ConocoPhillips has said they will not provide any capital for the project, but are providing information to Ikhil Joint Venture about the composition of gas and technical feasibility of the project.

Plans are to start drilling in the winter of 2012-13, one year from now. Usually companies drill one year and then build a pipeline the following season, to give the company time to ensure that the investment would result in gas. Because of the urgency of the situation, Ikhil Joint Venture would drill and build a pipeline in the same season with the hope that natural gas was at the location.

"Because of the winter-only drilling, there's no way we can do it this winter," Newson said. "It's a technical challenge because we're in a part of the world where there's not a lot of projects like this."

Time is of the essence because no one knows exactly how long the natural gas in the well currently feeding the town will last. According to a report by Inuvik Gas Ltd. made on Oct. 18, there's an estimated 1.13 to 1.67 years of production remaining in the well.

Before making a final official report, Inuvik Gas is waiting to see if the Northwest Territories Power Corporation (NTPC), the largest consumer of natural gas in Inuvik, will switch to diesel. According to Newson, NTPC has submitted a proposal to the financial management board on why the change is needed.

"Until we hear back (from NTPC) we won't formalize a reserve report, but we're not expecting any change," Newson said. "Everybody is wishing we could move quickly on this."

The Town of Inuvik has hired a natural gas supply expert as a consultant to help the town work with Ikhil Joint Venture to figure out how to address the shortage. The consultant will be shared with the GNWT, which is the next largest natural gas customer after NTPC.

Meetings have also been held with the NWT Public Utilities Board and Industry, Tourism and Investment about utility regulation and pricing. Ikhil Joint Venture and local contractors have flown the proposed pipeline route and looked for potential winter road routes as well. Ikhil has also been in contact with the National Energy Board to review regulatory requirements to drill and add a pipeline to the Ikhil facility.

If all goes as planned, natural gas will flow into town from the proposed Parson's Lake well in the spring of 2013.

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