How eight idle wells might determine the future of oil and gas in Yukon

·12 min read

When Richard Wyman, president of Calgary-based Chance Oil and Gas, thinks about the Eagle Plains Basin in northern Yukon, he conjures images of a small, bustling oil and gas operation providing a region that’s remote with much-needed energy and jobs.

That vision was in mind when Chance submitted a proposal to the Yukon Environmental and Socio-economic Assessment Board for a workover of eight idle wells owned, but not currently operated, by the company. The maintenance proposal, which includes flow testing to assess the basin’s resource potential, could lay the groundwork for a new exploration program in the Eagle Plains, an expansive area of rolling hills between mountain ranges 400 kilometres north of Dawson City.

Wyman told The Narwhal upwards of 30 exploration wells could eventually be drilled in the Eagle Plains if there’s enough gas there to make it financially worthwhile.

The possibility of development in the sensitive area is reigniting concerns about the impact oil and gas development would have on the Porcupine caribou herd, one of the largest migratory barren ground caribou herds in North America, which over-winters on the plains. It’s also forcing Yukoners to address whether or not the territory should consider fossil fuel development in a time of climate crisis, the impacts of which are being felt more acutely in the North than in the rest of the world.

The Chance proposal comes in response to a nudge from the Yukon government to assess the suspended wells and either shut them up for good, in a process known as well abandonment, or convert them to active wells once again. Four of the wells are legacy wells bought by Chance that date back to the ’50s and ’60s. The other four wells were drilled by Chance in 2012 and 2013, before the territory introduced a 2015 moratorium on fracking (the company has so far been unsuccessful in its attempt to sue the Yukon government for $2.2 billion in claimed damages stemming from that ban). Now Chance is hopeful that, with enhanced flow testing, some of the wells might show signs of oil and gas resources that could be developed without the use of fracking.

But others say there’s no point in searching for resource potential in an area that should remain permanently closed to oil and gas development.

“It’s always been an extremely marginal project, which is why it’s not gone anywhere,” Sebastian Jones, wildlife and habitat analyst for the Yukon Conservation Society, told The Narwhal.

“It’s a very remote area. It’s expensive to operate, the conditions are harsh. There’s never been any bankable resources there.”

Jones said oil and gas development in the Eagle Plains “risks causing damage and harm to the environment for no obvious reason.”

But Wyman says the full economic potential for development in Eagle Plains is currently unknown.

“The sedimentary basin has not been fully explored,” Wyman told The Narwhal.

“If operations are allowed to proceed and the exploration program is successful, it could have a profound economic benefit, both to the territory and the north Yukon, where it’s economically depressed.”

Wyman’s interest in creating jobs in the remote region is shared by some Yukoners and members of First Nations who have submitted public comments in support of potential development. Peter Charlie, from the Vuntut Gwitchin First Nation community of Old Crow, about 195 kilometres northwest of the potential development area, said he supports the idea of oil and gas taking off in the region. “We need work. It would be good to have people working. There is not much happening up here [in Old Crow], right now,” Charlie said in a submitted comment delivered by phone. “Everyone is going through a hard time. We have to get jobs up here. A lot of young people are not even doing nothing up here. Everyone is talking about this project. We have to get something going here. The project would give us work. It would be good for young kids too.”

The proposal, currently moving through a slow review process with the board, has also attracted a significant amount of criticism, notably for its potential to introduce ecological threats to a delicate northern ecosystem for a fossil fuel project that seems out of step with the territory’s own climate strategy.

The territory’s emissions grew by 11.8 per cent between 2009 and 2017, the most recent year for which data is available. In its 2020 climate change action plan, the Yukon government emphasized the need for more renewable energy, especially for the territory’s remote and often diesel-dependent communities, to meet a goal of reducing emissions 30 per cent from 2010 levels by 2030.

There is very little oil and gas development in Yukon and the vast majority of the territory’s electricity needs are met by hydroelectricity. But many remote communities not connected to the territory’s grid rely on costly, and highly polluting fossil fuels that are imported from other provinces. The territory currently spends about $50 million annually on fossil fuel imports.

Wyman argues there’s an environmental advantage to developing oil and gas in the territory, pointing out that Yukon is heavily reliant on fossil fuels for energy generation that have a high emissions footprint because they have to be transported in from out-of-territory.

“However you want to slice it, there’s thousands and thousands of kilometres of supply line … with its own greenhouse gas emissions,” he said. “If we were to find some hydrocarbons that were suitable for consumption in Yukon, we would significantly reduce the greenhouse gas emissions associated with the supply line. You’re going to get a net impact that’s positive.”

“The only question is going to be, does the Yukon give a shit about all the greenhouse gas emissions that are emitted outside the territorial boundary?”

Shortly after Yukon’s governing Liberals were voted into power in 2016, Ranj Pillai, Minister of the Department of Energy, Mines and Resources, received a mandate letter directing him to “promote responsible resource development balanced with environmental management and demonstrable benefits for Yukon by promoting oil and gas development outside the Whitehorse trough and without fracking.”

Brigitte Parker, a spokesperson for the Department of Energy, Mines and Resources, told The Narwhal in an email that Pillai’s letter continues to form the department’s mandate.

“Energy transitions take time and demand for oil and gas may continue into the foreseeable future,” she said.

Chance first floated the idea of commercial oil and gas development in Eagle Plains in 2014, but a regional office of the Yukon assessment board determined that the company’s proposal to drill 20 new oil and gas wells could have significant adverse effects for the transboundary Porcupine caribou herd, one of North America’s last healthy caribou populations, which has come under increasing threat from oil and gas development in a thawing north.

According to an evaluation report conducted at the time, the impacts on the herd would have included habitat loss, injury and mortality.

The Chance project proposal area falls within the territory of Vuntut Gwitchin First Nation, which is currently undertaking renewed analysis of how Chance’s current proposal could affect the herd.

Erika Tizya-Tramm, director of natural resources for Vuntut Gwitchin First Nation, told The Narwhal the Vuntut Gwitchin and Yukon governments “are working together to determine both the state of the herd and what those possible impacts could be and what the implications are” in response to Chance’s proposal. Vuntut Gwitchin First Nation, Tr’ondek Hwech’in, Inuvialuit and other nations harvest the Porcupine caribou for subsistence.

In its maintenance proposal, Chance noted it would only be able to carry out its work in the winter months, when the ground and snow conditions would be conducive to heavy trucks and machinery moving around on access roads. But the winter months are when the Porcupine caribou are most likely to be nearby.

Chance said if more than a dozen caribou are observed from the project area, or if caribou show up and hang around for more than three days, then the company will engage a qualified environmental professional to determine if site-specific mitigation measures are needed.

That plan struck members of the public and even Environment and Climate Change Canada as insufficient.

In response to Chance’s application, the federal department requested the company “describe the site specific mitigation measures that would be implemented in response to observations of more than a dozen caribou or caribou remaining in place for greater than three days.”

Environment Canada also noted Chance should describe the specific measures it would take should caribou show up.

The Yukon Environmental and Socio-Economic Assessment Board also wants to see more from Chance when it comes to assessing and planning for impacts to the herd. In April the board sent 21 specific questions to Chance, including a request for more information about the scientific foundation of the company’s plans.

Among other things, the board says it isn’t clear why Chance chose the threshold of more than a dozen caribou, or the need to establish mitigation plans if caribou linger for more than three days.

“It is not clear why these numbers have been chosen as thresholds or the conditions and triggers that would result in the need for site-specific or tailored management measures,” the board wrote to Chance.

Amelie Morin, manager of the board’s Dawson designated office, said numerous public comments have noted concerns about impacts to Porcupine caribou.

“We have seen comments through our seeking views and information period that identified potential impacts to Porcupine caribou and linking that to proposed activities … we’re certainly aware of that and will consider that in the evaluation,” Morin told The Narwhal.

Tizya-Tramm said there is a lot more work to be done when it comes to understanding how Eagle Plains oil and gas development could impact the herd and to ground mitigation plans for Chance in stronger analysis.

“We’re working to produce more materials around caribou, including safe operating distances and determining significant numbers of caribou that would trigger oil and gas development work to stop or continue.”

In its proposal to the board, Chance did not clarify how its project proposal was informed by engagement with the Vuntut Gwitchin First Nation or identify how the nation would be involved in cleanup activities should an accident or spill take place, according to the First Nation’s submitted comments.

“We need to be at the table every step of the way,” Tizya-Tramm said.

Before full-scale development can even be considered in Eagle Plains, Chance would have to submit a formal application to receive permits for that level of development.

Wyman said in the meantime, Chance needs to conduct this currently proposed work to determine if there are, in fact, resources available in the basin.

“There is no certainty that all this work will happen,” Wyman told The Narwhal. “The actual amount of drilling and seismic data acquisition will depend on results as the program unfolds.”

“At this time, we do not have specific locations where we will drill or where we will gather more seismic data.”

“The idea would be to get some more information about well capabilities, reservoir performance and help provide more insight as to what a development might look like with those wells,” he said.

To get that information, Chance hopes to perform extended flow testing, an activity that involves measuring volumes of natural gas and any associated liquids, such as propane, that may be produced from specific wells.

“All of this is relevant for designing development plans and engaging potential purchasers of natural gas and any associated liquids,” Wyman said.

He said the wells would be returned to a suspended state following the tests.

According to the company’s project, the tests would involve flaring for roughly six weeks. Flaring is used to dispose of any natural gas that may be produced during testing.

Jones said flaring would cause “considerable disturbance” for wildlife in the area.

“When you burn the gas off, it doesn’t just vanish,” he said. “There are byproducts from burning — carbon dioxide is obviously one of them. There are going to be fallouts of soot and chemicals and stuff like that onto the land around there. It’s also pretty noisy, it’s also pretty hot, it’s also pretty bright.”

Wyman said flaring stacks would be tall to mitigate potential environmental impacts. “The risk of doing anything untoward to the surface should be pretty limited,” he said.

Chance’s proposal also identified another opportunity to use some of the wells for waste disposal.

Two wells in particular “represent opportunities for deep zone injections,” Wyman said.

Injection wells, which are used primarily to dispose of certain fluids, including propane and waste water, are not readily available in Yukon.

“Rather than taking fluids 2,000 kilometres to a disposal site in British Columbia, which has its own environmental risks, we’d just dispose of them locally,” Wyman said, noting he wants to see the wells already drilled in Eagle Plains put to good use for local communities, either now or in the future.

“This [proposed] project is to protect assets that are viable for future use,” he said.

Wyman said any future exploration work would be done intentionally to be smaller in scale and span a longer period of time, “partly to minimize environmental impacts, but also to help develop local capacity to participate.”

The exploration program has been presented on “several occasions” to affected First Nations, including Vuntut Gwitchin First Nation and the Gwich’in Tribal Council, he said.

But many wonder if extended flow testing or flaring ought to be permitted under the auspices of a well maintenance proposal.

When asked if flow testing is considered an aspect of well maintenance, Morin from the Dawson designated office told The Narwhal, “I can tell you extended flow testing is an exploration activity. It’s related to exploration. It’s not related to the maintenance activities.

Chance Oil and Gas was unable to respond to all of the board’s requests for additional information by its May 10 deadline. The company indicated it would answer those questions within a one-year timeframe.

Chance has until Feb. 22, 2022, to provide responses to the board’s questions.

— With files from Julien Gignac

Carol Linnitt, The Narwhal

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