Tough times ahead? N.W.T businesses react to Beaufort decision

Businessman and formerTuktoyaktukmayorMervenGrubenpulledno punches when asked to describe the impact ofImperial Oiland BP's announcement last week that they're suspending plans to drill for oil in the Beaufort Sea.

"[It's]crazy,"Grubensaid. "Obviously that's not good news for employmentorbusiness-wisefor the whole Arctic."

Imperial and BP were going to drill two test wells in deep water northwest ofTuktoyaktuk. Their license requires them to begin drilling by 2020, but the companiessay that's not enough time.

Gruben says the plan was to have the community's all-season road finished in time for the 2020 start date of drilling. The project would have meant big business for the town's local contractors.

But Imperial says it's not abandoning its plan, it's just been pushed back.

"In a nutshell, this is all about allowing the joint venture partners the time that we believe is necessary to deliver the most technically sound and environmentally responsible exploration project that is possible," said PiusRolheiser,a media advisor with Imperial. "And we believe that's what the people of the Inuvialuit Settlement Region expect of us."

The companies are trying to get their deadline extendedto 2028 to give them eight more years. If they don't get the extension, they stand to lose their deposit of half a billion dollars.

Oil in decline

Oil and gas analyst Doug Matthews saidthat the news is an indicatortimes will get tougher for oil and gas development in the N.W.T. He's a consultant on a project to build a deep water port in Tuktoyaktuk that would support offshore drilling.

"We seem to be seeing a more serious approach to climate change as we head toward [the U.N. climate change conference in]Paris in December," said Matthews, "and [with] the Pope's encyclical, he will be addressing both the U.S.congress and the U.N. and building public and political support for dealing with climate change."

Matthews said some major European-based oil companies have argued for a carbon tax (for its part, so has Imperial).He says this is another indication we could be moving toward a post-petroleum world.

Grubensaidhejust hopes the project won't turn into another Mackenzie Valley Pipeline and wind up shelved forever.