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Oil company gives up exploration licenses in Canada's Mackenzie Delta

CBC NewsEye on the Arctic

MGM Energy Corp. has surrendered its exploration licenses in the Mackenzie Delta region of Canada’s Northwest Territories (N.W.T.), saying without the Mackenzie pipeline, it can’t get its natural gas and oil to markets.

The plan to build a 1,200-kilometer (745-mile) pipeline down the Mackenzie Valley is on hold due to weak natural gas prices.

MGM's five licenses were scheduled to expire in January 2016. With the abandonment, MGM Energy gets out of its license commitments, including $6.3 million due in June.

The company was looking to drill for natural gas in a large area north of the Arctic community of Inuvik, N.W.T.

“We saw little potential for the Mackenzie gas pipeline to be back on stream before those licenses expire,” said MGM vice president of exploration and operations, John Hogg.

“Without a pipeline to get the oil out, there’s no real reason to drill for oil.”

Hogg says the delta communities will be the ones hurt by this news.

“The people of Inuvik are the ones who would really like to see some work, I feel bad for them because they are great workers and now, they have nothing, so I certainly feel bad for that, but the course of business, it just doesn’t make sense to not have the infrastructure to get your product out,” said Hogg.

But Merven Gruben, Mayor of the Arctic community of Tuktoyaktuk, N.W.T., says MGM’s abandonment of exploration isn’t a big deal.

“I’m not too worried, as long as we still have interest from the big boys like Imperial, Exxon, ConocoPhillips, BP. I mean, we are still going forward with what’s happening in the Beaufort,” he said.

Many companies now look south to the Canol region for developing its shale oil reserves.

MGM says it will continue to probe that area, at least until hope for a Mackenzie pipeline is restored.

The Calgary-based company has suspended plans to drill in the area in the past.

This story is posted on Alaska Dispatch as part of Eye on the Arctic, a collaborative partnership between public and private circumpolar media organizations.