Inuvik, N.W.T., struggles with dwindling gas reserve

People in Inuvik, N.W.T., say they are angry and confused at rising energy costs. The town is running out of natural gas from its well earlier than expected and there are no plans yet to drill a replacement well.

Town might switch to propane as temporary measure, no plans yet for replacement well

Business owners and residents in Inuvik are confused and angry because energy prices are set to raise. The town has to switch to diesel and a propane-air mix because its natural gas well is running out earlier than expected. (Philippe Morin/CBC)

People in Inuvik, N.W.T., face the prospect of rising energy costs as the town's natural gas well is running out. 

Many say they are angry at the idea of paying higher bills only a few years after switching their homes and businesses to the fuel in an area abundant with natural gas.

Derek Lindsay, a former mayor of Inuvik, says he has a lot questions about a proposed switch to a propane and air mix. The switch is inevitable because investors say there is not enough time to build a new well before the current one runs out. 

The Ikhil well was supposed to last until at least 2014. However, water got into the well and has reduced its lifespan. The Northwest Territories Power Corporation (NTPC), which was the well's biggest client, has already switched back to diesel power to try to extend the well's life.

The town of Inuvik will also change its recreation centre to run on diesel power. Heating the centre, which includes a pool, sauna and arena, is expected to cost the town an extra $250,000 a year in energy costs.

Despite these measures, the Ikhil well is expected to run out in about a year and a half.

Most homes in town heated by natural gas

Residents are also skeptical about a proposed propane-air mix, which is set to replace gas when the well is eventually cut off.

About 90 per cent of homes in Inuvik as well as the hospital, Aurora College and all the town's government buildings are heated with natural gas.

"Most of us at home have natural gas furnaces. Will this new mix work on our furnace at home? Wish somebody would let us know because if we're going to be out of pocket here, plus an increased cost in the price of gas-propane mix, what is that going to do to us?" said Lindsay.

The initial agreement with Inuvik Gas, signed in 2000, does not hold companies responsible for any costs associated with the well ending earlier than expected. Negotiations for a replacement well are currently underway. 

However, three partner companies which form Inuvik Gas say they won't drill a new well without at least $60 million in taxpayer funding. They say Inuvik is too small a market to justify the expense, and add that companies are still paying for the failure of Ikhil. 

The project would require the construction of a 25-kilometre pipeline to bring the gas from nearby Parsons Lake, which is halfway to the neighbouring town of Tuktoyaktuk, N.W.T.

Former mayor disappointed at how supply turned out

Lindsay was on council when the agreement with Inuvik Gas was signed in the early 2000s. He says he's disappointed with how things turned out.

He says higher rates will affect everyone in town.

"We're already paying the highest natural gas prices in the world, and now we're going to have an extra burden on top of that? That's a little crazy." Public meetings on the issue happen next month.

Businesses worried they'll feel the pinch

Business owners say the last thing they need is higher bills.

"A lot of people are unemployed, everybody is feeling that business is slow and down," said Terry El-Khatib, who runs The Roost restaurant. These days, he's had fewer customers and faces the prospect of paying more for energy. 

"They should clear it up, we want to know how much more expensive. I hope it's not going to be double the amount. If it's a few dollars here and there, it's alright, but more than that people can't afford this," he said.

El-Khatib says the restaurant switched to natural gas from diesel three years ago. Inuvik's current mayor, Denny Rodgers, says the hamlet will try to find subsidies. He says propane is still less expensive than diesel.

The Ikhil Well was supposed to last until the Mackenzie Gas Project, at which time Inuvik would have tapped into the proposed $16 billion pipeline for a steady supply of fuel. 

But that project is currently on hold. Imperial Oil and other investors say they won't have a final decision on the pipeline for at least a year. Construction would only begin after Ikhil runs out.