Yukon government puts a lid on oil and gas interest in territory

The Yukon government has effectively put the brakes on any oil and gas development in the territory, by halting the process by which exploration rights are granted in the Kandik and Eagle Plains basins in northern Yukon.

Energy, Mines and Resources Minister Ranj Pillai announced the move on Thursday in the Legislative Assembly.

"This process is now officially discontinued, and there will be no further public review of the submitted locations related to the fall 2016 request for postings," Pillai said.

"Requests for postings" have been issued annually by the Yukon government, to assess industry interest in certain areas. Companies make submissions indicating which areas they would like to explore, and a competitive process to win exploration rights follows.

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In fall of 2016, the government received 15 separate submissions — 13 for the Kandik basin, and 2 in the Eagle Plains basin. The interested parties are kept secret by the government, and it's possible that all 15 came from the same company. 

The government has scrapped those submissions. There were none received in 2017.

Pillai said the move was prompted by First Nations' concerns. The Vuntut Gwitchin, Tr'ondëk Hwëch'in, and Na-Cho Nyäk Dun First Nations did not support the process, Pillai said.

Cancelling it will allow the government to work with the First Nations "to have a broader conversation on oil and gas exploration and development in north Yukon," Pillai said.

"This collaborative work will allow us to offer more clarity and certainty for companies interested in north Yukon's oil and gas resource potential."

'Say goodbye to our reputation'

The opposition Yukon Party immediately slammed the announcement.

"This is too bad on a number of fronts, as we potentially say goodbye to our reputation as a stable jurisdiction for oil and gas companies to consider investing in," said MLA Scott Kent, Pillai's predecessor as resources minister.

"This is worrisome because it could potentially spell the end of this industry here in the Yukon."

Kent referred to the Kotaneelee natural gas wells in southeastern Yukon, which operated from the 1970s until 2012, generating an estimated $46 million in royalties for Yukon. He says about a quarter of that went to First Nations governments.

He says Yukon stands to miss out on future windfalls.

"We've got great potential here in Yukon for this industry, and we need only look to our neighbours in British Columbia, Alaska and the Northwest Territories to see the enormous benefit they've received in taxes, royalties, and above all else, jobs for their citizens."

Pillai countered by saying the Kotaneelee wells are "a bit of a liability now for Yukoners," as the reclamation process continues there.

"Coming into office, we're looking at, approximately, I think it's a $2.4 million clean up ... we're short about $1.8 million compared to what was held in security," Pillai said.

"We have to get our security analysis properly in place, so as we move forward with this industry, we understand that as companies move out of a region, we still have the money put aside to clean up what's been done."

NDP leader Liz Hanson also suggests the Yukon Party has misplaced its faith in oil and gas development as a potential boon for Yukon. She supports the government's move.

"The notion of a viable oil and gas industry in Yukon is an illusion," she said.

"The pause button that this government has pushed on the oil and gas posting process is an opportune time for this government to do a reality-based assessment with respect to Yukon's continued involvement with an industry that cannot, does not, survive without significant subsidies."