BUSINESS

Black gold in the Arctic

ANN WALMSLEY January 13 1986
BUSINESS

Black gold in the Arctic

ANN WALMSLEY January 13 1986

Black gold in the Arctic

BUSINESS

In the past two decades Canadian oil companies have spent $6.5 billion plumbing the frigid waters of the Beaufort Sea at the mouth of the Mackenzie River. In September, 1984, Gulf Canada Ltd. of Toronto excited many industry experts when it discovered the Amauligak J-44 well, 75 km north of Tuktoyaktuk, N.W.T., the first evidence of a potential bonanza in highrisk Arctic oil exploration. Then, last week Gulf executives expressed jubilation over test results from a second well in the same oil field. Said Andrew Gustajtis, vice-president and senior oil analyst with Walwyn Stodgell Cochran Murray Ltd., a Toronto-based investment firm: “The test rates of 7,000 barrels a day would make it the most productive oil well in Canada.”

Indeed, industry analysts are confident that further development of the Amauligak field will pave the way for commercial production in the Beaufort—and justify the $l-billion to $2billion pipeline extension needed to ship the oil to southern markets. The closest pipeline ends 500 km short of the sea at Norman Wells, N.W.T. Gulf and its competitors in the Beaufort, including Dome Petroleum Ltd. and Esso Resources Canada Ltd., have to be certain that together they can produce at least 50,000 barrels of crude a day to justify a pipeline extension. Gulf estimates that the new 1-65 well, once fully developed, could produce 35,000 barrels of oil a day—50 per cent more than wells in the Hibernia field off Newfoundland. Gulfs 1984 discovery could add 13,500 barrels a day. Said Keith Caldwell, Gulfs vice-president of exploration: “It has the necessary characteristics to make it the lead project for Beaufort Sea development.” That declaration was welcomed by the Reichmann family of Toronto, which spent $2.85 billion in August to purchase Gulf Canada from its U.S. parent, Chevron. But Gulf will not confirm the extent of the field until 1987 or 1988 when tests are completed. If commercial production goes ahead— the early 1990s is a likely target—it would finally prove that the industry’s giant investment in the western Arctic was a wise one. Said Caldwell: “Our news has caused quite an upbeat feeling in the Beaufort.” That was one of the more restrained reactions to last week’s discovery.

ANN WALMSLEY in Toronto