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CALGARY— Ottawa has placed 905,000 hectares of the northern offshore up for bids, clearing the way for energy companies to snap up exploration rights for an area half the size of Lake Ontario. The scale of the offer indicates eagerness in the oil patch to drill for new finds in Canada’s northern waters less than two years after such plans were put on hold following the BP spill in the Gulf of Mexico and a major Arctic drilling safety review.
The Arctic exploration auction resumes as the Harper government is promoting greater development of the country’s resources. It has taken steps to speed regulatory approvals for major energy projects such as the proposed Northern Gateway pipeline, promising to limit the ability of environmental groups and other opponents to block or delay new developments.
The prospect of further northern drilling fits squarely with that mandate, said Jason MacDonald, spokesman for John Duncan, Minister of Aboriginal Affairs and Northern Development Canada, which oversees the northern land auction.
“The bid call reflects the potential that we see for resource development,” he said. “The North is home to world-class natural resources that represent a tremendous economic growth and tremendous jobs potential for northerners – and, frankly, for all Canadians.”
The North is in the midst of change, as melting ice promises more open northern shipping routes, which might help companies bring northern oil to global markets.
Development of Canada’s offshore Arctic energy, however, remains a risky bet. It has been nearly half a century since the federal government launched a program to drill in the frigid frontiers of the country through a company called Panarctic Oils. Although more than 400 wells have been drilled in the North, and some 65 petroleum fields found, barely a trickle of oil and gas has made it to market. Leases sold today might not yield anything for decades, if ever.
Still, the sheer magnitude of what is on the block is a clear signal that some in the oil patch are contemplating a return north, because parcels aren’t made available unless companies request them. In that sense, the current bidding round is a remarkable turnaround for an industry whose plans were, until late last year, halted by a National Energy Board review into offshore Arctic drilling.
“When these guys are bidding, it’s pretty safe bet they’re intending to drill,” said Doug Matthews, a northern energy consultant.
He pointed to the fact that companies that bid – under the system, bids are offers to spend a certain amount to explore the area – forfeit a quarter of their offer if they don’t do what they promise. “That’s some serious interest up there,” he said.
For the rest of this article, please go to the Globe and Mail website: http://www.theglobeandmail.com/news/politics/reviving-arctic-oil-rush-ottawa-to-auction-rights-in-massive-area/article2435284/