With six oil and gas wells and about 18,000 metres under its belt, the Fort Nelson-based Eht’oni drilling rig is poised to begin the summer drilling season in northeastern British Columbia.
Commissioned in December 2003, the state-of-the-art, $8-million oil and gas rig – “Eht’oni” means “arrow” in Dene – represents a unique partnership between the Fort Nelson First Nation and Calgary-based Ensign Drilling Services Group Inc.
EnCana Corp. is also a key partner in the success of Eht’oni – guarantees from EnCana to employ the rig “on a first up and last down” priority convinced the band to enter into the high-stakes oil game that has been heating up in its own backyard. While joint-venture partnerships between aboriginal groups and the oil and gas industry are common in Alberta and the Northwest Territories, the partnership between the Fort Nelson First Nation, Ensign and EnCana represents a first of its kind in British Columbia.
“We want to benefit, and we want to participate,” says Liz Logan, the chief of the Fort Nelson First Nation. “Our goal is to be financially independent, proud and self-reliant.”
|Photo courtesy of Encana Corp.|
|Liz Logan, chief of the Fort Nelson First Nation, says ownership of the drilling rig has come with a steep learning curve.|
The Fort Nelson First Nation is located four kilometres east of the town of Fort Nelson, and has 750 members, 450 of whom live on the reserve.
As chief, Logan faces a constant balancing act between protecting the spiritual and cultural needs of her people, and responding to the accelerated pace of industrial development in the traditional lands of the Treaty 8 First Nations.
“We need to pursue sustainable development that’s compatible with our culture and the traditional people who live on our lands,” she says.
For Logan and her band members, ownership in a drilling rig has come with a steep learning curve. She uses an old Dene elder expression – “we’re going with our hair straight back” – to describe their rapid initiation into the oil and gas service sector.
EnCana, the largest oil and gas explorer in the Greater Sierra area of northeastern B.C., is also moving “with its hair straight back.”
The use of “mighty mats” – wooden mats that are laid over muskeg – has expanded the company’s drilling season in Greater Sierra to include summer operations. As EnCana’s rigs roll over the muskeg, their weight is supported by these environmentally friendly access mats, the modern-day equivalent of corduroy roads, that measure 2.4x1.8 metres and are about 15 centimetres thick.
Incentives introduced by the B.C. government, such as royalty credits for road infrastructure, encourage all-season drilling in these northern locales, where operators historically concluded operations in late winter.
Michael Graham, EnCana’s president for Canadian foothills and frontier regions, describes the Greater Sierra as “EnCana’s largest regional gas play in Western Canada in the past 10 years.” The Greater Sierra now produces 350 million cubic feet of gas per day. Lying northeast of Fort Nelson, the region encompasses the Fort Nelson First Nation’s traditional lands.
EnCana drilled 200 wells last year in Greater Sierra, and has plans to drill another 200 wells this year. Graham says the company has identified 4,500 net drilling spacing units for gas in the area. Only 500 of these drilling spacing units have been drilled to date. Graham projects activity levels of 200 wells per year for the next five years.
At approximately $1.6 million per well, the Greater Sierra gas play represents a significant, long-term investment in B.C.
Using “built-for-purpose” rigs such as Eht’oni – designed for the Jean Marie reef play – EnCana has cut its horizontal drilling costs from $2.5 million to $1.6 million per well. The company employed a fleet of 32 rigs this winter, and expects to have 12 rigs working in Greater Sierra this summer.
“Eht’oni is the most technically advanced telescopic double rig of its kind in North America, equipped with a top drive and an automated pipe-handling system,” says Bob Geddes, president of Canadian operations for Ensign.
Eht’oni’s fully automated pipe-handling system means that the roughnecks don’t man-handle moving strings of drill pipe on the drill floor. Geddes says 80 per cent of drilling accidents happen while roughnecks are working on the drill floor.
Ensign operates Eht’oni on behalf of the 50-50 partnership, and the company’s Fort Nelson office supports its northern operations for EnCana and other industry clients.
Geddes says 75 jobs have been generated to support the rig’s operation – including three six-man drilling crews, drilling supervisors, and administrative and camp personnel.
Eht’oni’s field staff also includes one Fort Nelson band member and one Gwich’in band member. Geddes says he would like to see more Fort Nelson members working on the rig as it’s expensive to fly personnel north.
But band members are in scarce supply, says Logan. “We’re proud to say that we’ve got one of the lowest unemployment rates in B.C,” she adds.
To celebrate its commissioning, the rig was assembled on the reserve. With its running lights, Eht’oni resembled a Christmas tree in the northern night sky. “They saw Eht’oni as a vision for the future,” said Geddes. “And it truly was. It was something that they could touch.”
A Grade 3 student at the Chalo School won the contest to name the rig; she called it Eht’oni because it pointed to the sky.
However, for Logan and the band, eht'oni represents one of several “arrows” in their quiver.
In 2000, the Fort Nelson First Nation developed an economic diversification strategy called Reaching for our Vision. Eh-Cho-Dene, the Fort Nelson First Nation’s construction company, was created to take advantage of the oil and gas work being generated in its backyard.
The band has also entered the tourism industry with the recent purchase of a lodge near the Liard Hot Springs. It is currently in the process of establishing an economic development corporation that, according to Logan, will remain “at arm’s length from the political group (band council).”
Meanwhile, EnCana attributes a large part of its success in the Greater Sierra gas play to its partnership with the aboriginal people: Graham is quick to point out that EnCana draws heavily upon the Fort Nelson First Nation’s knowledge of its traditional lands for environmental assessments and consultations with stakeholders such as trappers.
EnCana also employs the construction services of Eh-Cho-Dene. “They’re topnotch,” says Graham. “They could come into Alberta and compete with any company.
“The bands truly want to come into the mainstream; they want to be businessmen.”
Geddes concurs. “Their shareholders are their band members, and they really want to create value for shareholders, just like any company.”
It’s all about values, says Logan. “First Nations measure things culturally, and corporations measure things monetarily.”
However, it seems that Ensign, EnCana and the Fort Nelson First Nation have found a common ground based upon mutual respect and shared economic goals. “Our relationship with industry is a whole lot better than with government,” adds Logan.
Seven years have elapsed since the signing of a Memorandum of Understanding between the Treaty 8 First Nations and the federal and provincial governments, and there’s still no resolution on oil and gas revenue sharing. The stakes are high – Treaty 8 lands cover an area of 841,491 square kilometres in northeastern B.C.
“The province may be open for business, but we control the doorstopper,” says Logan.
(Susan Eaton is a Calgary-based geologist, geophysicist and freelance writer. She can be reached at email@example.com)