Northern Cross has found a backer with deep pockets to bankroll its plan to pump natural gas from Eagle Plains.
The small, privately held Calgary company has partnered with an offshoot of the China National Offshore Oil Corporation to help complete approximately $20 million in exploration work over the next few years, starting in early 2012.
In doing so, Northern Cross has joined the ranks of two Yukon mining companies that have turned to commodity-hungry China to help fund their operations.
Yukon Zinc, which operates the Wolverine lead mine near Ross River, is wholly owned by two Chinese firms.
And Selwyn Resources has partnered with a state-owned Chinese company to develop the massive lead and zinc deposit near the Northwest Territories border.
Northern Cross spent five years seeking financial support for their plans to tap oil and gas beneath Eagle Plains. In the end, they went with CNOOP Ltd. because “they have a longer-term vision,” said President Richard Wyman. “And in northern Canada, you need a longer view.
“North America doesn’t have much of an appetite of growing energy demand, whereas Asia does.”
There’s an estimated six trillion cubic feet of natural gas beneath Eagle Plains. Northern Cross 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.
CNOOP is a “big player in LNG – liquified natural gas,” said Wyman. He hopes to tap that expertise.
Western Copper Corporation envisions a mine at its Casino project that would be powered with LNG. The company currently expects to be fed the fuel from a nearby port.
But if Northern Cross succeeds, it could offer LNG closer to home, at lower costs.
Another obvious customer is Yukon Energy, which currently resorts to burning expensive diesel fuel to meet the territory’s energy needs.
The Vuntut Development Corporation, in partnership with other northern First Nations, is currently studying how to best deliver Eagle Plain’s gas to market.
One plan would see LNG facilities built at Eagle Plains. Another would see a 500-kilometre pipeline built out to Stewart Crossing. From there, gas would be fed to a generator connected to the Yukon’s power grid and to an LNG plant to supply mines.
Northern Cross expects to spend the next several years firming up its understanding of how much oil and gas it’s sitting on, by sinking a dozen new wells and exploring four existing ones.
The company plans to run a 24-hour operation, which would be staffed, at its peak, by nearly 100 workers.
That means Eagle Plains will soon be a busier place than it’s been since its previous peak of exploration, between the 1950s and 1970s.
“This will mark a new era,” said Wyman.
Contact John Thompson at firstname.lastname@example.org.