With a giant question mark hanging over the proposed Mackenzie Valley natural gas project, this will be a quiet winter for oil and gas activity in the Northwest Territories as operators wait for greater certainty the project will proceed.

This week, partners Apache Canada Ltd. and Paramount Resources Ltd. officially put on hold for this winter plans for a one to three-well drilling program at Turton Lake in the Sahtu area of the Central Mackenzie Valley. The announcement cited "delays in the process for approval and construction of the Mackenzie Valley pipeline and other factors beyond Apache's control."

The companies, who have been active in the area for the past three winters, are concerned the delay will be a year or two, David Calvert, senior advisor of surface land, regulatory, aboriginal and community affairs, said in an interview.

"We have stranded capital up there now, we have a lot of money we have invested and have decided that this year we are not putting any more money into it," he said. "We need to get more certainty."

Once companies have done a certain amount of drilling and proved up reserves, they need to decide how much more they want to spend until they know they will have a way to ship that gas, Calvert said. "I think a lot of companies are pretty nervous about the timing of the pipeline and if and when it goes ahead," he said. "We know we are in that category."

Imperial Oil Joint Ventures Ltd., the operator of the proposed $7-billion project, has promised to notify the National Energy Board and Joint Panel Review committee this month if it is ready to proceed to public hearings. The company is still committed to meeting that promise, spokesman Pius Rolheiser said this morning. Initial plans called for the pipeline to be in operation by 2009 but now appears it will be 2010 at the earliest.

The process has been delayed by negotiations over access and benefit agreements and more recently Imperial's discussions with the federal government over what it has described as the need for a fiscal framework. However, Rex Tillerson, president of ExxonMobil Corp., Imperial's parent company, said recently in Calgary he expects the project to proceed.

In the Mackenzie Delta/Beaufort Sea area, the only drilling activity this winter will be Devon Canada Corporation's offshore Beaufort well -- the first in nearly 20 years -- which will spud in December. The $50-million to $60-million well, the first of four planned holes, will be drilled in the Paktoa/Tiggak area on the western area of the exploration licence. Devon plans to drill in about 40 feet of water to a depth of about 2 000 metres.

Operators Chevron Canada Limited with partner BP Canada Energy Company and Burlington Resources Canada Ltd. and EnCana Corporation and its partners, Anadarko Canada and ConocoPhillips, will stay home this year to continue evaluating the results of the past two winters' successful exploration drilling.

However, on the geophysical side, Husky Oil Operations Ltd. is currently conducting an 8 320- kilometre aerogravity survey over the Mackenzie Delta/Beaufort Sea area. Company spokesman Leif Sollid described it as a "reconnaissance" project.

Chevron and partner BP also are planning a smaller 170 square kilometre three-dimensional survey over Exploration Licence 394 in the west central part of the Mackenzie Delta.

In the Central Mackenzie Valley, Husky Energy Inc., operator of the exploration licence containing the Summit Creek B-44 discovery, plans to drill two wells beginning in January 2006 after completing a 200-kilometre two-dimensional seismic program over the area this past summer. One well will assess the size of the Summit Creek pool discovered by B-44 while the other will test a separate undrilled prospect.

Husky Energy holds a 29.5% working interest in EL 397. Its partners are Northrock Resources (32.5%); EOG Resources (26.4%), Pacific Rodera Energy Inc. (6.63%) and International Frontier Resources Corp. (five per cent).

Devon recently wrapped up a 7,793 square kilometre aerial gravity survey in the Sahtu area of the Central Mackenzie Valley that will be used for planning future programs.

Petro-Canada had hoped to conduct a seismic program this winter on its newly-acquired exploration licence in the Sahtu area in the central Mackenzie Valley but it now appears that will have to be delayed until next year due to regulatory delays in gaining approvals, said Leah Purdy a company spokesman.

Further south, Paramount Resources Ltd. drilled a new well at K-29A at West Liard in the third quarter to improve the recovery of the existing pool. The company earlier said it expects the well to be completed and tied-in by the end of this year. K-29A, which was spud in August, reached a final total depth of 3 620 metres and will be completed in the Nahanni formation.

In the Fort Liard area, Anadarko Canada Ltd. has deferred a $250-million natural gas gathering system for another year although the project is not dependent upon the Mackenize Valley pipeline. With a change in local Deh Cho First Nation leadership and recent comments by the federal government, the company is hopeful the project can get back on track, company spokeswoman Nadine Barber said.

The project would involve tie-in of two or three wells to the Paramount pipeline which goes into Pointed Mountain and then Fort Nelson, British Columbia.

Anadarko earlier indicated it wanted some indication from the federal government and the Deh Cho on a new rights issuance before it submits its regulatory application. A 2002 agreement would have opened up some of the Deh Cho traditional lands to oil and gas exploration and protect others from new development.

The federal Indian affairs and northern development department has issued a call for nominations for Crown land parcels in the Mackenzie Delta/Beaufort Sea and Central Mackenzie Valley and Arctic Islands of Nunavut prior to a call for bids early next year.

Operators have until Nov.29 to post parcels in the Mackenzie Delta/Beaufort Sea while the deadline is Dec. 20 for the Mackenzie Valley and Nunavut.

Any exploration licences issued for the Mackenzie Delta and Arctic Islands would have a nine-year term consisting of consecutive periods of five and four years. The Mackenzie Valley exploration licence is eight years with terms of four and four years.

In response to motions from exploration companies in the Mackenzie Delta, the National Energy Board recently ruled that Imperial will be required to file and serve copies of documents or agreements required to become an owner or shipper on the line as part of the overall Mackenzie gas project. All except the proposed Mackenzie gas gathering and processing facilities development and operating agreement are to be public documents.

In its decision, the board noted it had accepted "the appropriate tolls, access and tariff provisions for the Mackenzie gathering system and the methods for resolving disputes on these matters," as an issue for the hearing.

Elsie Ross - Nickle's Daily Oil Bulletin