The development of this resource will bring more interest in oil and gas into the region and may lead to the construction of a pipeline from north eastern BC to Yukon. It also is another further step down the road to the development of the oil and gas resources in the Mackenzie Delta and eventually the tar sands on Melville Island.
Until there is a lot more green electrical power and oil is no longer economically viable, the development of oil and gas resources will move further and further out there. BC could help by extending the grid to Yukon.
Northern Cross touts solution to Yukon’s energy pinch
Wednesday June 16, 2010 by John Thompson
As far as fossil fuels go, it’s cheap, clean and plentiful.
If Northern Cross has its way, the stuff will help power Yukon’s next generation of mines. It may even one day help propel the trucking fleet that carries goods up the Alaska Highway.
It’s natural gas. There’s an estimated 5 trillion cubic feet of it beneath Eagle Plain, and Northern Cross, a small, privately-held Calgary company, wants to pump it to the surface, chill it to minus 160 degrees Celsius so it condenses to liquid, and truck it to energy-hungry mines within the territory.
“There’s a large need for additional energy, especially with a growing mining industry, and we’d love to service that industry with clean-burning natural gas, if we can,” said president Brian Avery.
On Friday the territory announced that Northern Cross won the right to explore 49,000 acres of property in Eagle Plain, just shy of the Arctic Circle, after pledging to conduct $615,100 in exploration work over the next decade. Oil and gas dispositions are given to whichever company pledges to commit the most work.
The new disposition completes a patchwork of properties already claimed by Northern Cross. All in, the company has rights to explore nearly 1.3 million acres of Eagle Plain Basin. It has pledged to conduct a total of $21 million in work.
Next step: before exploration begins, the company needs to raise between $50 million and $100 million.
“Financial markets have been a little shaky lately, to say the least, so we don’t have the wherewithal to do exploration yet, but we’re hoping that will come together in the next few months,” said Avery.
If financing falls into place, Northern Cross plans to sink a dozen new wells, starting early next year, and to explore four existing wells that were drilled in the 1960s and 1970s.
The operation would employ approximately 100 workers at any given time, said Avery.
The company’s first three drilling licences have already cleared Yukon’s regulatory hurdles. This work would all be done immediately adjacent to the Dempster Highway.
Northern Cross already has its drilling rig in place at the old Camp 204. Next, it plans to move a 46-person camp up from Fort Nelson.
When Northern Cross formed in 1994, its focus was on pumping oil from Eagle Plain to sell to Yukon customers. In 1998, after spending $2.5 million, the company produced a few hundred barrels of crude, which was shipped to Whitehorse and fed to Yukon Energy’s diesel generators.
But a shrinking territorial economy, following the Faro mine’s closure, put the company’s plans on ice.
Since that time natural gas has become a more attractive commodity. It is 25 per cent cleaner than burning oil, and about that much cheaper. Once liquified, it takes up a small fraction (1/600) of the volume of natural gas.
Northern Cross still hopes to extract crude—the new plan is to truck it to Fort Nelson for distribution. But the company’s new focus is on selling liquified natural gas to Yukon’s next cohort of mines.
The territory’s hydroelectric grid is currently under strain. The addition of a new turbine near Mayo will help keep pace with consumer demand, but there won’t be enough capacity to feed a new mine.
Western Copper Corporation, for one, envisions a mine at its Casino project that would be powered with liquified natural gas, known in the industry as LNG. The company currently expects to be fed the fuel from a nearby port.
Avery’s operation, if it succeeds, would offer LNG closer to home, at lower costs.
Northern Cross’ pitch coincides with resurgent interest in natural gas in North America, driven by new technologies that allow companies to extract gas from previously unreachable shale deposits.
Natural gas proponents tout the fuel as a replacement for dirtier diesel. That’s led to a drive to refit North America’s trucking fleets to run on LNG. Such fleets are not uncommon in Europe but are a rarity on this continent, for lack of refuelling facilities.
The state of California is leading the push. It has more than 450 natural gas refuelling stations, and it plans to ban diesel trucks from hauling goods from the state’s two largest ports by 2012.
In Canada, EnCana Corporation wants Ottawa to help it build a chain of liquid natural gas fuelling stations between Windsor and Quebec City. The company boasts that converting just one heavy-duty truck to LNG would be equivalent to taking 325 cars off the road.
But the widespread adoption of LNG faces many obstacles - popular fears of a massive explosion being just one.
But Avery notes that liquified natural gas has been safely extracted and transported in Alaska for several decades. Alaska has shipped LNG from the Kenai Peninsula to Japan since 1969. And, since 1998, trucks have hauled LNG to Fairbanks Natural Gas’ storage facilities. From there, LNG is converted back into gas and distributed to homes and businesses.
“It’s very much proven technology,” said Avery. It’s almost like trucking propane around.”
The company faces more challenges than fundraising in tight times. Its drilling grounds overlap with two conservation controversies: the migration route of the dwindling Porcupine caribou herd and the boundaries of the Peel Watershed.
Northern Cross plans to stop drilling when caribou are nearby to avoid spooking the animals. Avery also asserts that the herd usually doesn’t venture as far south as where the company plans to begin work.
An eight-hectare slice of one property encroaches into the Peel. The territory granted the disposition, despite a ban on exploring for minerals, oil and gas in the region until February of next year.
No surface access will be allowed on the Peel lands while the ban is in place.
Karen Baltgailis, executive director of the Yukon Conservation Society, acknowledges the overlap is small, “but we still find this is inconsistent with the spirit and intent of the moratorium. To me, it seems the message that the Yukon government is sending is, ‘We’re not serious about the Peel planning process.’”
The territory is currently mulling over a proposed regional land-use plan for the Peel. The finished plan will determine which activities will be allowed in the overlapping area. Whatever the outcome, “We’ll govern ourselves accordingly,” said Avery.
Contact John Thompson at johnt@yukon-news.com
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