Industry less than keen on oil and gas development

The Yukon government has made it easier for companies to buy oil and gas development rights. But that doesn’t mean the industry is racing to…

The Yukon government has made it easier for companies to buy oil and gas development rights.

But that doesn’t mean the industry is racing to snap up the property.

No permits were issued in the territory’s latest round of bidding for oil and gas permits.

Two companies — which aren’t revealed — wanted to buy two pieces of property in the Peel Plateau in northern Yukon.

In the Yukon, companies select a property for bidding.

Then, Energy, Mines and Resources compiles a report for the minister recommending the property be put up for bid or not.

This time, the companies declined to bid on the properties chosen for development.

The rejection of the oil and gas industry doesn’t mean the industry is nervous about investing in the Yukon, says the department.

“We’ve heard the opposite, at trade shows and from industry leaders,” said oil and gas rights and royalties manager Deb Wortley.

“We’ve heard constantly that the Yukon is a good place to target. Industry considers the territory as frontier for oil and gas investment.”

The territory solicits requests twice each year, the next of which closes January 2009.

Companies that submitted requests usually have several months to bid on the land.

In January, two companies selected property in the Peel Plateau oil and gas basin in northern Yukon.

The government took 60 days to review the locations before passing on a report for approval to Energy, Mines and Resources Minister Archie Lang.

The report included modified the companies’ proposals, said Wortley.

“Our office recommended the areas be reduced slightly at the request of some First Nations in the area,” she said.

The Gwich’in Tribal Council and Tetlit Gwich’in Council of the NWT has settlement land and surface rights in the Peel Basin, which also includes the Na-cho Nyak Dun traditional territory.

The disposition process in the spring happened as the Peel Watershed Planning Commission was completing its land use plan for the area.

Some of those consulted suggested the government wait until the plan was finished before offering resource rights in the region.

Others were concerned about the affect development would have on the winter range of the Porcupine caribou herd.

Bald eagle, peregrine falcon and osprey nesting sites along the Peel and Caribou rivers, and the fish habitat in several rivers were also raised as concerns.

Adjusting the boundaries of the companies’ requests would satisfy those concerns, and it can’t move the boundaries of the company’s preferred location, said the department.

“We’re only able to make it smaller,” said Wortley.

Lang agreed to his department’s recommendation and the call for bids opened April 28.

The process closed June 11 without any bids.

Companies that requested the land decided not to follow through.

The government won’t identify which companies were involved in the latest round of bidding.

“We only report successful bids,” said Wortley.

The territory recently streamlined the bidding and request process.

In 2007, it received 28 requests from oil and gas companies looking for land in the region. Nineteen locations were made available for bidding, which led to14 permits issued to companies.

The territory collected more than $22,000,000 from those permits.

The 14 permits essentially doubled the number previously issued in the Yukon.

These were the first to be issued in six years.

There could be “a number of reasons” for the refusal to bid, said Wortley.

The Mackenzie Valley Natural Gas Pipeline review was delayed by the Joint Review Panel, adding to the project’s uncertainty.

The companies might have re-evaluated plans to develop oil and gas properties in the Yukon, said Wortley.

“These areas (in the Peel Plateau) can be developed, but there’s still no way of getting gas to southern markets,” she said.

Fluctuating market prices can make companies hesitate, added Wortley.

For example, in one year, starting September 2007, a barrel of oil rose from about $80 to a high of about $145 in August and back down to just above $91 today.

“A small change in the market can be a big change for small companies,” said Wortley.