Industry vies for Beaufort oil and gas

The right to explore for oil and gas in a big swath of the Beaufort Sea off the Yukon's north coast has been put up for grabs by Ottawa. Six parcels are on offer, covering 905,900 hectares.

The right to explore for oil and gas in a big swath of the Beaufort Sea off the Yukon’s north coast has been put up for grabs by Ottawa.

Six parcels are on offer, covering 905,900 hectares. That’s up by one parcel and 56,706 hectares from 2007-08.

The call for bids was issued after the Department of Aboriginal Affairs and Northern Development Canada received requests from industry.

But it will likely be a decade before any actual drilling is done in the Beaufort’s new parcels, said Doug Matthews, a northern energy consultant. And it remains to be seen how much the Yukon would benefit from these plays.

Territorial officials must still hash out details with their Ottawa counterparts. They’ve wanted to do so since 1998.

That’s three years before the Yukon’s devolution agreement was signed and five years after the two levels of government signed off on the Canada-Yukon oil and gas accord, said Perry Diamond, the territory’s senior oil and gas adviser.

That deal states that Canada and the Yukon will share management responsibilities, royalties and taxes, said Diamond.

But exactly how that will look, and how much money this means for the territory, remains unclear, he added.

Things got a little bit more specific in 2008 when another deal was signed. It ensures the Yukon will have a say when Ottawa strikes a benefits plan with any company hoping to drill.

But there is no obligation for Ottawa to listen to the territory, he said.

“Ultimately it is the federal minister’s plan,” he said. “We do speak to those parcels, but it’s their show.”

Any drilling in the Beaufort also falls under the Inuvialuit Final Agreement. That means the Inuvialuit get a share of the jobs and royalties, too.

Industry’s renewed interest shows concerns that the National Energy Board will be too strict are gone, said Matthews.

The board began a widespread review of Arctic offshore drilling concerns and regulations after the BP oil spill in the Gulf of Mexico.

At that time, a bidding frenzy had already started in the Beaufort. And as the Arctic’s ice melts, big companies like BP, ExxonMobil and Chevron are eyeing the area with interest.

The board’s review is now done, but it hasn’t done much to assure local communities, which fear a spill could cause an environmental disaster.

The board will apply strict safety standards, said NEB spokesperson Rebecca Taylor.

Any company that successfully bids on a parcel would need to post a bond worth 25 per cent of the total work cost. That’s supposed to ensure that any companies that bid are serious about setting up a rig one day.

Contact Roxanne Stasyszyn at

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