Yukon digs for another $8.5M

Building passing lanes and smoothing rocky terrain has sent the price tag on the government-funded Hamilton Boulevard extension skyrocketing.

Building passing lanes and smoothing rocky terrain has sent the price tag on the government-funded Hamilton Boulevard extension skyrocketing.

The as-yet unbudgeted project has seen a 50-per-cent cost increase since original estimates pegged it at $12 million.

The new $18-million price tag accounts for the need to have a four-lane road, instead of two lanes, in steep areas to allow for the passing of slow-moving vehicles, said Whitehorse engineering services manager Wayne Tuck.

Also underestimated was the amount of rock that has to be removed in escarpment areas.

“Who knows what it’s going to cost when it comes time to build that thing,” said Tuck.

The 4.5-kilometre extension would cut through forest south of Copper Ridge and connect with Robert Service Way.

The city applied for money under the Municipal Rural Infrastructure Fund. It would split the bill three ways with municipal, territorial and federal governments each chipping in equal amounts.

But the city has capped its contribution at less than one-third of the original estimated project cost at $3.5 million.

That leaves the Yukon government, which has agreed to step in and help pay the city’s shortfall, about $8.5-million — a sum not itemized in its 2006-2007 budget.

“A line item will have to be generated,” said the Yukon’s program manager for the project, Brian Ritchie.

There is $250,000 available to complete the engineering design for the roadway, but construction costs will have to be added into the 2007-2008 budget, he said.

The city’s fund application won’t be considered until August, he said.

“Provided all the budget approvals are in place, we’ll be in a position to start (construction) in the spring of 2007.” (RM)

ENERGY

Devon drills another bust

Devon Canada Corporation will curtail its offshore drilling program in the Beaufort Sea next winter.

The company found some natural gas in a hole it drilled in the Mackenzie Delta over the 2005-06 winter, about 180 kilometres north of Inuvik, Northwest Territories.

It was the first well drilled in the region in 15 years.

But there wasn’t enough gas to continue Devon’s $60-million Beaufort program, vice-president Michel Scott told CBC Radio One.

“We’ve found hydrocarbons in, I’d say, substantial quantities, but not quite what we needed to,” Scott said in an interview with CBC last week.

Devon Canada, a wholly-owned Canadian subsidiary of the US company Devon Energy Corporation, is Yukon’s most significant oil and gas player.

Devon owns and operates the Kotaneelee gas fields in the territory’s southeast corner, which are currently the territory’s only producing gas wells.

One of the wells started to decline in 2004, so the company re-drilled from a different angle into the same gas deposit, with limited success.

The Yukon expected 2006 royalty revenues from Kotaneelee to decline by about $500,000, or eight per cent.

The territory still makes about $6 million per year from Kotaneelee.

In March 2005, Devon spent more than $4 million drilling another well in the Eagle Plains area that turned up dry.

“There just wasn’t enough there to pique our interest, really,” Scott said at the time.

“That’s why the well was plugged and abandoned.”

However, by spending the money to drill the hole, Devon extended its Eagle Plains licences by four years.

Last fall, Devon dragged a steel-drilling caisson from waters near Herschel Island off Yukon’s north coast across Mackenzie Bay to its target in the Mackenzie Delta.

Its Beaufort drilling program provoked the ire of conservation groups, like the World Wildlife Fund, which were concerned about destruction of Beluga whale habitat.

Devon’s 342,000 hectares of licenced exploration territory in the Beaufort don’t overlap with proposed marine protected areas designed to protect Beluga habitat, said Scott.

“We’re drilling in a location called Paktoa, north of Inuvik in about 40 feet of water,” Scott said last summer.

Previous estimates from the company predicted up to 300 billion cubic feet of Beaufort gas.

The company claims to be the largest exploratory leaseholder in the Paktoa region.

If Devon doesn’t drill in the Beaufort next winter, it must pay Ottawa a refundable $1 million and will lose the rights to half of its offshore holdings in the Beaufort.

Devon is required to drill two more offshore wells in the Beaufort before 2011, under the terms of its licence, according to CBC. (GM)