The town of Inuvik, N.W.T., will pay more for energy for at least one or two years because of uncertainty around natural gas.
There is plenty in the region, but a new well could cost almost $70 million.
Mayor Denny Rodgers said the problem couldn’t be predicted.
"Sometimes mother nature has a say in what happens in these reserves, and in this case there is water coming into the well. It's leaving behind unusable gas," he said.
The Ikhil well was supposed to last until 2014, with the plan to then tap into the Mackenzie Gas project.
Now, that well is going to run out in just over a year.
With still no pipeline commitment, Inuvik needs natural gas. Drilling a new well would take years, and it is also unappealing to investors to take on such an expensive project.
"The problem is, if you're going to sink potentially $70 million into a project, we're such a small market," said Rodgers.
The shortage at the Ikhil well has cost millions because the power corporation has converted to diesel. The territorial government is paying for that conversion at a cost of $5 million.
The recreation centre is being converted to diesel, which alone costs an extra $250,000 per year.
In future, Inuvik's homeowners in town might have to rely on a propane-air mixture, which Rodgers says is more expensive.
"Short term, if we use the air propane that we have to buy that additional time, then I am confident we can come up with a long-term solution," he said.
The town, the power corporation and the gas company, Inuvik Gas, will hold public meetings in April.