Sahtu oil needs $100 price to get to market: analyst

Low oil prices have thrown the future of oil exploration in the Northwest Territory’s Sahtu region into uncertainty.

The price of oil has been below $90 a barrel for most of October.

Last week, the N.W.T.'s government issued its first call for oil and gas nominations since devolution.

“I don't think there's going to be much interest from exploration companies,” says Doug Matthews, an energy analyst based in Canmore, Alta.

Even before the drop in oil prices, the biggest players in the region —​ ConocoPhillips and Husky Energy — had already said they wouldn't be drilling this winter. 

Matthews says oil will likely have to return to $100 a barrel before companies renew interest in the Sahtu.

He says the oil giants with exploration rights in the Sahtu also have properties in places such as Texas, where profits come faster because there's more infrastructure, such as pipelines.

“If you find a barrel of oil in the Eagle Ford [shale gas development in Texas] you can get paid for it in about a week and a half. If you find a barrel of oil in the Sahtu, it could be 10 years before you can get it to market.”

Matthews says that, combined with higher exploration costs, means plays such as the Canol Shale in the Sahtu are going to be the first to be postponed when prices drop.

But Matthews says the call for bids sends out one message industry will be happy to hear — that the rules for exploration in the N.W.T. have not changed because of devolution.