McKenzie Valley shale oil development is attracting much investment attention.
CALGARY: A potentially enormous new shale oil prospect in the Northwest Territories is giving some communities hope that the resource-driven economic boost they’ve long been waiting for may finally be close.
But development of the shale oil find, known as the Canol, has also raised concern over the use of hydraulic fracturing, also known as fracking, in a remote, ecologically fragile part of the central Mackenzie Valley that is new to that oil and gas extraction technique.
“If they’re going to do fracking, at least let us be involved so that we can watch the process, we can make sure it’s nice and clean because we do need economics around this area,” said Chief Wilfred McNeely Jr. of the Fort Good Hope Band.
McNeely said some residents are concerned about how much water would be drawn from the Mackenzie River for the fracking process, in which producers inject water, sand and chemicals into the rock at high pressure in order free the oil and gas. He said some have also expressed concern over chemicals contaminating the river.
But unemployment in the community of 567 is high, so said he’d welcome the jobs and investment that would come from oil development.
In June two parcels of land around Fort Good Hope were leased for $92 million—one to Royal Dutch Shell PLC, and another to Shell and MGM Energy Corp. in partnership.
“To me that adds up to a lot of money,” said McNeely. “Having these oil companies in the country, I look at it as a positive thing.”
Those leases are in addition to 11 more that were awarded elsewhere in the central Mackenzie last year for a total of $535 million to major players including Husky Energy Inc., Imperial Oil Ltd. and ConocoPhillips.
The Canol stretches from around the Fort Good Hope region south to the hamlet of Tulita, between the Mackenzie River and the mountain range to the west—a “massive piece of real estate,” according to David Ramsay, the Northwest Territories’ minister of industry, tourism, investment and transportation.
He said there could be between two and three billion barrels of recoverable oil in the Canol, putting it the same league as the Bakken, a major shale oil region that underlies parts of North Dakota, Montana and Saskatchewan.
The economic upswing was evident last winter while some seismic work was taking place around Normal Wells, NWT. Hotel rooms were virtually unobtainable, store sales doubled and takeoffs and landings at the local airport tripled, he said.
“It’s that kind of activity that’s going to drive the economy. We have always struggled with employment levels in smaller aboriginal communities in the Northwest Territories.”
This winter Husky is planning to evaluate two vertical wells it drilled in the area a year earlier, and is seeking regulatory approval to build an all-weather access road around its leases.
Ramsay acknowledges there are concerns over fracking. He and other members of his government will be in Calgary the week of August 20 to meet with industry, regulators and environmental groups to learn more.
“People want to know, and people have every right to know, what the impact on the water will be, the chemicals that would be used.”
Environmental lawyer Stephen Hazell, who participated in lengthy regulatory hearings into the Mackenzie natural gas pipeline, said shale oil development in the North should be rigorously studied.
Fracking in and of itself has concerns, he said, but heavy equipment moving over permafrost raises a whole host of other environmental issues.