The Yukon’s oil and gas management branch has been doing its homework, and paying for help.
Officials needed to know how much natural gas there is in the Yukon, where it is and how to get it.
And the economics have to work, if the territory is to have a successful intervention in the ongoing National Energy Board hearings for the proposed Mackenzie Valley natural gas pipeline.
The outlook is good, according to David Dunn of Fekete Associates Inc., an Alberta firm that the Yukon government paid about $80,000 to examine potential development and benefits scenarios.
In a 75-page report released Tuesday, Dunn highlighted the territory’s three major natural gas basins: the Whitehorse trough, the southeast Yukon and Eagle Plains.
Altogether, there are 20 trillion cubic feet of gas and one billion barrels of oil estimated to be locked in the Yukon.
That’s considerably less than the 52 trillion cubic feet of gas in the Mackenzie Delta, or the 126 trillion cubic feet in Alaska’s North Slope.
But it’s enough to justify a lateral pipe from North Yukon to the Mackenzie Valley, said Dunn.
“Upon approval of the Mackenzie Valley going forward, you’re going to see a significant rise in the development and drilling activity in North Yukon.
“That, we expect, will happen over the years 2008 to about 2011.”
The most bountiful Yukon basin is in Eagle Plains, where 34 wells have been drilled over the past three decades to tap six trillion cubic feet, said Dunn.
A 20-inch pipeline running 410 million cubic feet of gas every day from Eagle Plains would be full until 2044, he said.
“At that time, other basins start coming on, principally Peel Plateau, but now we’re getting well out into the development scenario and we did not carry the forecast any further than that.”
Dunn crunched the numbers on four lateral pipeline scenarios from the Yukon to either the proposed Mackenzie pipe or the proposed Alaska Highway pipeline.
The shortest and cheapest would run 350 kilometres from Eagle Plains to Inuvik, NWT, following the Dempster Highway corridor.
The 20-inch pipeline would cost $822 million, and could be completed with gas flowing by 2017, four years after the prospective completion of the Mackenzie Valley pipeline.
Most of the Yukon’s gas would go to market, with the territory making $74.7 million in royalties, said Dunn.
“Under the Yukon’s formula financing, approximately 60 to 80 per cent of these royalties over the first $3 million will flow to Ottawa.
“Royalties are not, as they are for Alberta, the key form of economic gain for the Yukon.”
But a pipeline scenario offers many opportunities for direct investment, employment and other business opportunities, such as drilling rigs and telecommunications, said Dunn.
“The key to any North Yukon gas pipeline is, it has not yet been determined who would build it.”
He estimated 2,250 workers would be needed to complete the project, but only 50 would be needed to manage it once the gas was pressurized and flowing.
But he estimated 165 winter jobs and 201 year-round jobs to maintain a Yukon oil and gas operation, with all its infrastructure.
There’s also the possibility of a small oil refinery being built at Eagle Plains, he said.
Dunn’s report did not include an ecological impact assessment.
And none of the government experts assembled at Tuesday’s news conference could explain the environmental footprints of the proposed scenarios.
Dunn’s findings are not likely to please the Canadian Parks and Wilderness Society, which launched a major lobbying campaign last year to protect 30,000 square kilometres of the Peel watershed from industrial development.
“The department of Energy, Mines and Resources talk about oil and gas as through there are no ecological impacts, as though there are no impacts on fish and wildlife populations,” said CPAWS spokesman Mac Hislop.
“(The department) will talk to us about potential reserves; they’ll talk to us about wells being drilled and jobs and economics, but they won’t talk to us about the known and very significant and sometimes devastating ecological impacts of oil and gas development.
“This is particularly troubling. The Yukon public’s interest in having good information to make well-informed decisions has not been served well by the department.
“The department is in a troubling spot. On the one hand they are supposed to be regulating oil and gas, and on the other they are promoting oil and gas.”
CPAWS solicited a report from the Alberta-based Pembina Institute last year that scrutinized potential landscape impacts of gas development in northern Canada, including the Peel Plateau.
The Pembina report predicted 434 wells would be needed to drain Peel gas reserves.
It included a 30-year map of the Peel Plateau crisscrossed with seismic lines and pock-marked with more than 100 well pads.
The Yukon government took a close look at the Pembina report and found it riddled with false assumptions.
“My concerns were with the data that the Pembina Institute put into the (land management) model,” said petroleum engineer Richard Corbet of the oil and gas branch who wrote a technical review of the Pembina report.
“My second concern was with the output and how they presented it.”
The Pembina report used data relevant to industry techniques that were used 30 to 40 years ago, such as cutting five-metre seismic lines down to mineral soil with a bulldozer, said Corbet.
“I don’t expect that there will be a seismic line that wide in the Yukon.
“Heli-portable, low-impact seismic with small-track vehicles is the way industry is choosing to go for cost and environmental reasons, and I expect that trend to continue.”
Discussions with various Yukon First Nations have delayed the territory’s fifth oil and gas disposition expected earlier this year, but officials still hope to make industry an offer in 2006.