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Inuvialuit unveil ambitious LNG project that could bring energy security to region

The Inuvialuit have unveiled an ambitious plan to begin producing liquified natural gas to move the region into a more energy-independent future. The Inuvialuit Petroleum Corporation is teaming up with Ferus Natural Gas Fuels to advance the Inuvialuit Energy Security Project.

Aiming for production of greener, cheaper alternative to diesel in 2 years

The Inuvialuit have released a plan to produce liquefied natural gas and ship it to Inuvik and other communities. If it proceeds, the project will be the first resource development to use the Inuvik-Tuktoyaktuk Highway. (Chris Corday/CBC )

The Inuvialuit have unveiled an ambitious plan to begin producing liquefied natural gas (LNG) to move the region into a more energy-independent future.

The Inuvialuit Petroleum Corporation (IPC) is teaming up with Ferus Natural Gas Fuels to advance the Inuvialuit Energy Security Project. Ferus is owned by a Houston-based investment fund called the Energy and Minerals Group.

According to an announcement on the Inuvialuit Regional Corporation's website on Tuesday, the plan is to tap into the Tuk M-18 natural gas well and build a plant to convert the gas into liquefied natural gas that can be trucked to Inuvik and other communities.

The Tuk M-18 well is located 24 kilometres south of Tuktoyaktuk. It was drilled by Devon Energy and Petro-Canada almost 20 years ago and is part of the massive gas reserves in the Beaufort-Delta region that were left stranded when Esso and its partners abandoned their Mackenzie Gas Project.

Devon and Petro-Canada said the well has well over 200 billion cubic feet of recoverable natural gas.

You couldn't do it without that road.- Doug Matthews, energy consultant

If the project goes ahead, it will be the first natural resources enterprise spurred by construction of the all-weather Inuvik to Tuktoyaktuk Highway.

"You couldn't do it without that road," said Doug Matthews, an energy analyst and principal of Matthews Energy Consulting. "The local market, which is Tuk, is not big enough to cover the costs of developing that field. With the road, you can reach other markets, which changes the economics of the project quite significantly."

Matthews said, though Inuvik is the biggest market in the region and key to the project's success, once the natural gas is liquefied it could also be shipped to other communities by truck or barge to reduce greenhouse gas emissions and, ideally, provide a cheaper alternative to diesel.

Matthews said the project would be a good candidate for federal support because it would produce greener energy, stimulate the economy in a region that is depressed and stimulate indigenous business development.

Aiming for production in 2 years

According to the Inuvialuit Regional Corporation's announcement, the IPC plans to complete the design of the gas plant this fall and develop cost estimates for the project that will inform a final decision on whether to proceed or not. If the project moves ahead, regulatory applications will be submitted by the end of this year.

If all goes according to plan, construction of an all-weather road to the well will begin prior to the spring thaw in 2021. Construction and commissioning of the plant will be done in the fall and early winter of that year. The partners would begin shipping liquefied natural gas in the spring of 2022.

In the announcement, the IPC says the project would replace the diminished Ikhil gas well that supplies some of Inuvik's energy needs, reduce reliance on expensive southern fuel, create business opportunities in the region and lower the cost of living.

CBC called and emailed the IPC and emailed the Inuvialuit Regional Corporation (IRC) for more information about the project but no one was available to talk about it.

The Ikhil well began declining sooner than expected. Much of Inuvik's gas is now being trucked in from British Columbia.

People in the region have been talking for many years about tapping into the trillions of cubic feet of gas that have been discovered in the region.

Three years ago, Inuvialuit Regional Corporation chair and CEO Duane Smith, right, said the corporation was looking at five to seven wells near the Inuvik to Tuktoyaktuk Highway. (Senate of Canada/Jade Thériault)

Three years ago, IRC chair Duane Smith said the corporation was looking at five to seven wells near the highway. Smith said the IRC had contacted the companies that had rights to the wells and requested more data on them.

Five years ago, then Inuvik mayor Floyd Roland, talked about it to the Standing Senate Committee on Energy, the Environment and Natural Resources.

Roland told the committee the M-18 well could be the beginning of a new liquefied natural gas industry in the region. The former premier said the territorial government spends $150 to $200 million to supply fuel to the region annually. He said an LNG plant would cost about $400 million to build and could be financed if the territorial government committed to buying the gas it produced.

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