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This aerial image provided by the U.S. Coast Guard shows the Royal Dutch Shell drilling rig Kulluk aground off a small island near Kodiak Island on Jan. 1, 2013.

Sara Francis/AP

The federal government is opening a vast new frontier for oil and gas activity in Nunavut's high Arctic with a call for companies to indicate their interest in bidding for exploration rights.

In a notice this week, Aboriginal Affairs and Northern Development Canada issued a call for nominations – essentially asking industry to select promising blocks that would then be put up for competitive bidding.

Ottawa says the area is highly prospective, though companies would face enormous obstacles getting any natural gas produced to markets. A proposal to build a natural gas pipeline from the western Arctic down the Mackenzie Valley has long been stalled.

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Companies drilled 164 wells in the 1970s under lucrative federal incentives and discovered an estimated 14 trillion cubic feet of gas and 300 million barrels of oil. Two gas fields in the Arctic islands represent the largest two untapped gas fields in Canada.

Environmental advocate William Amos said the federal government is rushing headlong into Arctic oil and gas exploration without taking into account environmental issues. "They're moving forward with the process for auctioning off exploratory drilling rights without having gone through the comprehensive process to determine areas where drilling won't be allowed," said Mr. Amos, director of the Ecojustice environmental law clinic at the University of Ottawa.

Last month, the federal environment commissioner issued a report criticizing Ottawa for driving resource development while failing to keep pace with environmental protection. The commissioner, Scott Vaughan, said Ottawa has failed to meet its international commitments to protect Canada's coastal waters.

The federal action aims to open the central Arctic for activity, even as oil companies pursue opportunities in the western Arctic.

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About the Author
Global Energy Reporter

Shawn McCarthy is an Ottawa-based, national business correspondent for The Globe and Mail, covering a global energy beat. He writes on various aspects of the international energy industry, from oil and gas production and refining, to the development of new technologies, to the business implications of climate-change regulations. More


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