Beaufort Delta
Economy

New Inuvialuit plan to supply natural gas in two years

Last modified: June 11, 2020 at 9:14am


With oil and gas effectively at a standstill in the Beaufort Delta, the Inuvialuit Petroleum Corporation plans to have gas flowing to customers in the region by the spring of 2022.

Announcing the Inuvialuit Energy Security Project, the company – a subsidiary of the Inuvialuit Regional Corporation (IRC) – shared plans to develop a previously discovered natural gas well on the Tuktoyaktuk Peninsula.

With technical support from Calgary-based Ferus Natural Gas Fuels, the corporation intends to extract gas from the Tuk M-18 well, convert it to liquid natural gas (or LNG) at a small plant on the well site, and truck it along the Inuvik-Tuktoyaktuk highway to customers in the region.

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The Tuk M-18 well is located about 20 km south of Tuktoyaktuk and 125 km northeast of Inuvik.

The well has previously been developed, most recently by Devon Canada Corp and Petro-Canada in the early 2000s.

It forms part of reserves the $16-billion Mackenzie Valley Gas Project had planned to develop before that project was abandoned in 2017 amid low market prices and complaints about the regulatory process.

The IRC said the project will replace the Ikhil gas well, where supply began dwindling in 2012.

The project is expected to reduce the region’s reliance on fuel trucked in from the south. At present, LNG is transported to Inuvik from a plant in Delta, BC, 3,600 km away. Shutdowns on the Dempster Highway can interrupt supply.

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The IRC declined an interview request, stating it wished to respect consultation taking place with “community leadership and stakeholders in Tuktoyaktuk and Inuvik.”

If the project is approved, IRC communications advisor Elizabeth Kolb wrote, a “small gas plant” would be constructed and operated at the well site. The plant would convert natural gas to LNG.

How the product would be sold to customers has not been laid out. Kolb said the corporation will seek territorial and federal support for the project “for the benefit of families in the region.”

A timeline for the project shared by the IRC suggests design of the plant and cost estimates will be complete by this fall, in preparation for a final investment decision – which is a critical stage of an oil or gas project’s development, marking the point at which a decision is made to move ahead with a project deemed profitable and funded.

By the end of 2020, the corporation plans to submit applications for the required regulatory approvals. And before spring thaw 2021, construction of an all-weather road to the well will start. Some remediation work will also be needed. By fall 2021, plant construction will start.

The IRC says gas from the well project will supply the region for decades, and will also make it cheaper to live and do business in the delta. “Good-quality permanent jobs for residents and cost savings in heat and fuel” are the main benefits, the corporation stated.

Despite little recent oil and gas activity, scientists at the Geologic Survey of Canada have in the past estimated the delta contains 11.74 trillion cubic feet of recoverable natural gas that has already been discovered. That 1994 estimate didn’t include discoveries made since 2000. Records show there have been 10 “significant discoveries” since that point – among them the Tuk M-18 well.

The project can also reduce greenhouse gas emissions by “thousands of tonnes each year,” the IRC stated, adding it will involve “no significant impacts on the environment.”

Ferus Natural Gas declined to comment, citing the need to give time and space for consultations to happen in a “meaningful way.”

Ferus operates an LNG plant in Elmworth, Alberta, and supplies natural gas to the NWT and Yukon as well as to the oil and gas industry.

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