Northern Cross’s plans are a pipe dream

Sebastian Jones By the time you read this, the Yukon Environmental and Socio-economic Assessment Board will have been working with Northern Cross Yukon for over a year to assess the company's proposal to explore for oil at Eagle Plain. The plans include u

COMMENTARY

by Sebastian Jones

By the time you read this, the Yukon Environmental and Socio-economic Assessment Board will have been working with Northern Cross Yukon for over a year to assess the company’s proposal to explore for oil at Eagle Plain. The plans include up to 20 oil wells and associated infrastructure, including a new 80-kilometre all-season access road.

The Yukon Conservation Society thinks this is a bad project. YCS is submitting comments to assessors detailing the project’s flaws and unacceptable impacts. Our comments will be available on the YCS website. But really, our big issue is that Yukon should not be exploring for and developing fossil fuels at all.

Yes, Yukon society is utterly dependent on a steady supply of fossil fuels. Yes, we currently import 100 per cent of these fuels. And yes, we should be developing local energy sources instead. But no, we should not pursue this vision of self-reliance and sustainability by drilling Eagle Plain.

The science journal, Nature, has stated that if we are to avoid the worst impacts of global warming, most fossil fuels must remain in the ground – and while we are moving away from fossil fuels, we should concentrate on lower-impact sources and shelve extreme petroleum. Nature specifically calls for Arctic and remote sources to be left alone. Eagle Plain definitely falls into this category.

Some say Eagle Plain could be developed to supply Yukon’s needs and reduce our dependence on imported oil. The thinking here is that we could develop a small field and a micro refinery and trickle the oil out for decades. This claim does not withstand scrutiny. If a viable oil field is discovered (50 years of effort in Yukon has produced a grand total of four barrels of oil), it will take at least a decade of development before any oil reaches the market.

The cost to develop an oil field is fixed but the cost per barrel is reduced as more oil is produced. The fixed cost for an oil field would be high enough that the revenue per barrel consumed in Yukon if the production was only for local use would never pay back the investment. So, to recoup development costs, oil production would have to be maximized with most of the oil being exported. Thus the oil field would be more quickly exhausted, and Yukon needs would only be met over the short term.

Oil from remote fields like Eagle Plain, lacking any infrastructure, needs high prices to be economic – closer to $150/barrel than $50, the price for most of the past year. Unfortunately, $150 oil is unaffordable for most applications. At those costs, people cut back on fuel consumption or switch to alternatives, demand falters and the price of oil falls again. Once it falls, places like Eagle Plain are no longer viable.

Much bigger and more accessible fuel sources than Eagle Plain are being mothballed right now. A good local example is the huge gas reserves, fully identified and drilled, in the Mackenzie Delta. Gas and oil are similar in that they are both energy sources. All it would take to use this gas is to hook it up to nearby Inuvik, which was purpose-built to use natural gas. Yet it’s cheaper to pipe gas from Alberta to southern B.C., turn it into liquefied natural gas and then truck it all the way to Inuvik than to run a few kilometres of pipeline to town.

Clearly, Eagle Plain oil will never make economic sense.

Northern Cross Yukon should leave Eagle Plain to the eagles. It’s increasingly obvious that intact ecosystems are far more valuable than the fossil fuels we can wring from them. Let’s speed up the transition to local renewable energy sources, using initiatives like the independent power production policy instead.

Sebastian Jones is the Yukon Conservation Society’s energy analyst.

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