Company plans to expand Kotaneelee

A new company has controlling interest in the Kotaneelee gas fields of southeast Yukon, but so far they've stayed mostly quiet about their plans for the area. A July release announced the acquisition by EFL Overseas Inc.

A new company has controlling interest in the Kotaneelee gas fields of southeast Yukon, but so far they’ve stayed mostly quiet about their plans for the area.

A July release announced the acquisition by EFL Overseas Inc. of Devon Energy’s share of the Kotaneelee gas project, which is home to the Yukon’s only two producing natural gas wells.

In October, EFL Overseas announced a controlling interest in the project after acquiring shares from Nahanni Energy Inc.

The company expressed interest in the area’s “conventional and important unconventional resource development opportunities.”

Conventional natural gas resources are easier to get at, but typically less plentiful than unconventional resources.

Unconventional natural gas reserves are usually extracted using a controversial method called hydraulic fracturing, or fracking, where pressurized water, sand and chemicals are blasted deep into the ground to break apart shale rock and release gas trapped inside.

The NDP and environmental groups have called for a full review of the process before any fracking is allowed in the territory.

But while the government agreed that some review is required, it committed only to work with key stakeholders in the North Yukon, notably the Vuntut Gwitchin First Nation in Old Crow.

A Yukon government briefing document dated Oct. 26, 2011, shows that officials were aware of a company with significant interest in expanding the Kotaneelee development at that time.

“The proposed new lease holder has ambitious and immediate plans should they successfully negotiate acquisition of the Kotaneelee interests and assets,” according to the document.

The briefing note also indicates that the prospective owners have an interest in testing for “considerable shale gas potential” by early 2013.

But it’s too early to say what EFL Overseas plans to do in the area, said Jesse Devost, spokesperson for Energy, Mines and Resources.

The company has yet to file development plans with the government, and in fact has not yet met with officials for a preliminary conversation, he said. EFL Overseas did not respond to multiple requests for comment.

A Dec. 3 release from EFL Overseas includes an update on the company’s potential resources in the area.

But it doesn’t indicate a specific interest in fracking, said energy consultant Doug Matthews.

Production at the existing wells is in decline largely due to the tendency for wells in that area to fill with water, said Matthews.

The company will have to expand production if they want to make the economics work, but that doesn’t necessarily mean fracking, he said.

“The economics just are not all that good in that particular area.”

It makes sense that the company is dropping hints that it is interested in the area’s unconventional resources, he said.

“If they’re trying to pump their stock a bit and make their company look interesting, they would probably try to align themselves with the big shale plays in northeast B.C.”

But if the company does plan to go that route, they can expect to come up against heavy opposition.

The Kotaneelee falls within Kaska traditional territory, and the Kaska have been vocal in their opposition to fracking.

EFL Overseas has not contacted the Kaska about their interest in the Kotaneelee, said Liard McMillan, chief of the Liard First Nation. The first he heard of it was when it came up this fall in the legislature, he said.

The Kaska announced in September a ban on any oil and gas development on their lands until the government agrees to negotiate several contentious issues.

Yesterday, the government struck from the Oil and Gas Act a clause that allows unsigned First Nations the right to veto oil and gas development in their traditional territory.

But the Kaska argue that, law or no law, they have a right to decide what happens on their land.

“This was a reckless waste of time by the government,” said Brian Ladue, chief of the Ross River Dena Council. “The matter will be decided by a judge. Not one bit of activity will take place in Kaska territory without our consent, as per our agreement with YTG, which is still in effect. We are just starting the fight back against a government that is hostile to First Nation rights and title.”

Contact Jacqueline Ronson at

jronson@yukon-news.com

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