A New Direction for Canada’s Arctic Gas

Menzie McEachern's picture
Menzie McEachern, Director, Mineral and Petroleum Resources, Department of Industry, Tourism and Investment, Government of Northwest Territories
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Observers that know nothing else about Canada’s North have heard the story of the Mackenzie Gas Project — a historic pipeline project that would have flowed natural gas from the Northwest Territories’ Mackenzie Delta into the national pipeline network in Alberta had the shale boom not blown the bottom out of the North American market.

Instead, incredible quantities of gas, originally defined to supply the Mackenzie Gas Project, now lie in wait of a new project and more favourable economic conditions.  The Canada Energy Regulator pegs the amount of available natural gas at upwards of 10 trillion cubic feet.

But, as any energy investor will tell you, it’s unfulfilled potential without the competitive access to markets that will pay the right price.  

Today, that market is the Asia-Pacific where Liquefied Natural Gas (LNG) is being sold at five to seven times North American prices and the most direct route to these lucrative high gas-demand markets is “over the top” from the Beaufort Sea west through the Bering Strait.

In fact, gas can reach the Asia-Pacific marketplace two or three days quicker from Tuktoyaktuk on Canada’s Arctic coast than from many of the established ports on the west coast of North America or Russia.  It’s about 3800 nautical miles from Tuktoyaktuk to Tokyo compared with 4300 from Vancouver to Tokyo, and well over 5100 nautical miles from the Yamal Peninsula to Tokyo.

Meanwhile, the technology which will define the future for LNG in Canada’s Arctic is icebreaking LNG tankers.  With reinforced hulls and more nimble controls to navigate the complexities of the Arctic, these tankers have been running at full capacity from Yamal to Tokyo since late-2018.

As important to the new narrative are floating LNG facilities – capable of processing gas into liquid and then loading the product on ships; again technology that is already in use by giants like Petronas and Royal Dutch Shell in Malaysia, Australia and Russia.

With an abundance of resources, growing demand and new technologies, interest and awareness is once again turning to the North’s natural gas resources.  Even long-held regulatory, safety and environmental concerns are, in today’s story, steadily surmountable. 

And residents of Canada’s resource-richest territory are hopeful that a new direction may finally be what it takes to open the next chapter in the development of Canada’s Arctic gas resources.