Nunavut and Northwest Territories Development Context
Canada’s North is home to huge reserves of oil and gas and it is estimated that one third of Canada’s remaining potential for conventional oil and natural gas lie in this area. The North boasts some of the oldest operating oil wells in North America, with Imperial Oil first conducting exploratory drilling in 1919 (Nutall 619 ). Although exploration increased in the 1940s and 1950s, most took place from the 1960s-1980s. Similar to oil exploration in other areas, interest in the Arctic increased as a result of the oil price shocks of the 1970s.
Exploration has led to a number of discoveries but thus far little production. There have been 28 discoveries in the Mackenzie Valley and production of oil and gas at two fields (Norman Wells and Cameron Hills). There have been 60 discoveries in the Mackenzie Delta/Beaufort Sea area. A significant amount of gas has been found but thus far there is only one field in production (Ikhil). In the Arctic Islands, 19 discoveries of oil and gas have been made. One field, Bent Horn, produced a small amount of oil during the 1980s and 1990s.
Production
As of 2013, three fields were producing oil or gas in the Arctic, all of them in the Northwest Territories: the Norman Wells field, the Ikhil gas field, and the Cameron Hills field. Total oil production from Norman Wells and Cameron Hills was 638.1 thousand cubic metres and total gas production from Norman Wells, Ikhil, and Cameron Hills was 133 million cubic meters (Northern Oil and Gas Report 2013).
There has been limited oil production thus far in the Canadian Arctic. The Norman Wells oil field (in NWT) was discovered in 1920 (INAC annual report 7) and has been in production since 1943. Producing 5 – 6 million barrels of oil per year, it is valued at 330 – 400 million dollars per year. In the mid-1980s, the Norman Wells oil field expanded and an 869 km pipeline was built to northern Alberta (INAC 7). It has been in operation since 1985. The owner and operator of the pipeline is Enbridge. It has been viewed as somewhat of a pilot project for pipelines in the North and is the first completely buried oil pipeline in permafrost terrain in Canada.
Panarctic Oils produced 2.8 million barrels of oil from 1985-1996 from the Bent Horn oil field (on Cameron Island, now Nunavut). Due to ice conditions, oil could only be transported during the summer months, when it was sent via tanker to Montreal.
No major gas production has taken place in the Arctic, although there is great potential. A small project in Inuvik generates electricity for local residents. This project is expected to run out of natural gas several years earlier than originally anticipated and it is unclear how the community will remain supplied.
Recent interest
Interest in the North was re-ignited in 1995 when new exploration licenses were issued by the Crown for the southern NWT and Mackenzie Valley (Northern Oil and Gas Annual Report 2009:8). Since 1999, companies have gotten exploration licenses for much of the Mackenzie Delta and adjacent offshore. This has meant increased exploration as companies try to meet their license commitments. Interest in deeper waters in the outer continental shelf in the central Beaufort Sea began in 2007-2008 (Northern Oil and Gas Annual Report 2009:8).
In 2009, for the first time in many years, industry showed no response to calls for nominations for the Mackenzie Delta-Beaufort Sea or the central Mackenzie Valley. Interest picked up in subsequent years, with 6 exploration licenses issued in 2010, 13 in 2011, 8 in 2012, 1 in 2013, and 1 in 2014. Industry has shown little interest in Arctic Islands calls for nominations or bids in recent years.
[1] Mark Nutall, “Aboriginal Participation, Consultation, and Canada’s Mackenzie Project,” Energy and Environment 19 (2008), 617-634
[2] http://www.iti.gov.nt.ca/MediaRoom/DYK.shtml
[3] http://gsc.nrcan.gc.ca/permafrost/pipeline_e.php
*
The content for this province was peer-reviewed in Oct 2013. We’d like to acknowledge the assistance of the external reviewers and Leah Fusco who authored this webpage content.
