April 6, 2001
AARON SPITZER
Nunatsiaq News
IQALUIT — Despite rising world demand for oil and gas, there will be no exploratory drilling in the High Arctic this year.
There were no takers when the Department of Indian and Northern Affairs put out a call for drilling applications in December.
The lack of interest came even though the value of oil and gas are at near-record highs, and though reserves elsewhere in North America are running low.
Nunavut is thought to sit on one of the largest untapped oil and gas deposits on the continent, with over $1 trillion in resources under the Sverdrup Basin west of Devon Island.
According to David Scott, the chief geologist with the Canada-Nunavut geoscience office, the world’s thirst for oil and gas apparently still isn’t intense enough for companies to justify the astronomical expense of working in the Arctic.
But while drillers aren’t headed to Nunavut this year, Scott said it’s inevitable that one day they will.
"Its just a matter of time and price," he said. "There are monster deposits out there. The promise is huge."
From the late 1960s to the early 1980s, exploration in the Sverdrup Basin revealed the area contains about 10 per cent of Canada’s remaining crude oil. For 11 years the Bent Horn field on Cameron Island actually produced light crude, some of which supplied the Polaris Mine on Little Cornwallis Island.
High Arctic exploration during that time also turned up 14 trillion cubic feet of natural gas — about a quarter of Canada’s known reserves.
But to make it worthwhile to tap the gas, the price — currently at the lofty level of $6 per 1,000 cubic feet — will have to climb even higher.
"When you can afford to explore for $9 gas, maybe that’s when they’re going to be up in the Arctic," Scott said.
The return of drilling to the Northwest Territories is a good sign for Nunavut, as it proves that companies are pushing into frontier regions, Scott said.
The Mackenzie Delta region of the NWT is seeing a mini-boom this year, as drillers rush to the area in droves.
Over the next three years, about 500 new jobs are expected to be directly created by oil and gas exploration in the area.
There’s also talk of building a pipeline down the Mackenzie valley to Alberta – a project that could bode well for exploration in the High Arctic, by reducing the potential cost of getting Nunavut’s resources to southern markets.
Scott expressed confidence that Nunavut will one day be transformed by oil.
"Eventually it’s going to happen. And that’ll be the real economic engine for Nunavut. Look at the way it turned Alberta around. It was a have-not province, and now it’s the richest province in the country. And it’s all because of oil. The same could happen to this part of the world."
Scott said he suspects Nunavut’s oil-boom will take place "in our lifetime."
Despite the lack of interest in drilling this year, DIAND plans to put out an annual call for exploration permits. The next call will likely go out near the end of the year.