There are plans to permanently shut down the Kotaneelee gas field in the southeast corner of the Yukon.

John Fox of the territorial Department of Energy, Mines and Resources said this week Apache Canada has decided to proceed with a full decommission of the remaining wells, the processing plant and other associated infrastructure.

The decision comes in light of financial problems faced by EFLO, a company that was planning on bringing the gas field out of dormancy.

Kotaneelee, the Yukon’s only commercial gas field, is located in the Liard Basin.

It began producing in 1979 and stopped in 2012, when gas volumes fell below viable levels.

It produced a total of 236 billion cubic metres over the years and generated $45 million in royalties for the Yukon government, according to records.

In 2012, EFL Overseas Inc. of Houston, Tex., purchased controlling interest in the gas field, with a plan to reinvigorate existing wells and conduct additional exploration.

EFLO went through the environmental screening process with its proposal. It received approval from the Yukon government in February 2015 to proceed with its plan.

But after the company received an order in mid-2015 to take remedial steps at its well sites because they’d been inactive for over a year, EFLO informed the Yukon government in October 2015 it was insolvent.

“That started the process where we had the authority under the act to transfer the well licences and field facility licences to another company who had an interest in the wells and field facilities,” Fox explained.

He said next to EFLO, Apache Canada had the largest interest in three of the four wells and field facilities, and the licences were subsequently transferred to Apache.

The fourth well was owned entirely by EFLO, so responsibility to look after it has fallen to the Yukon government, which has a $625,000 security deposit posted by EFLO, said the assistant deputy minister.

Fox explained remedial measures called for under the Oil and Gas Act require that steps must be taken to put oil and gas wells into a formal state of suspension if they are inactive for more than 12 months, or permanently abandon them.

Apache has decided to permanently abandoned the three wells it’s in control of and the Yukon government will permanently abandon the well it’s inherited through EFLO’s insolvency, Fox said.

The joint proposal to abandon the four wells has been filed with the Yukon Environmental and Socio-economic Assessment Board.

Fox said Apache has also decided to move forward with plans to abandon the entire site, including the removal of the gas plant, though the proposal currently before the assessment board is just for the abandonment of the four wells.

Apache spokeswoman Castlen Kennedy confirmed in an email today from her office in Houston, the company will be shutting down the gas field.

“As a prudent operator working in the best interest of its shareholders, Apache and its partners do not see economic value in field redevelopment at Kotaneelee,” Kennedy wrote.

“In light of EFLO’s financial situation, Apache has stepped up to perform field abandonment activities.”

It was also Apache that stepped forward in the summer of 2015 to clean up a spill at the gas plant of processed water with one per cent contamination from hydrocarbons when EFLO was unable to.

Under the current proposal, the Yukon government will work in partnership with Apache to abandon the wells, he said.

Fox said the final cost has not been determined though it’s clear the $625,000 EFLO had posted as security will not be enough to cover abandoning the one well the Yukon government is responsible for.

The cost is likely somewhere between two or three times the amount of the security deposit, or between $1.25 million and $1.875 million, he said.

Fox said the act does allow the Yukon government to go after EFLO assets to recover the difference, but he’s not sure what assets if any are available. EFLO has not filed for bankruptcy, the assistant deputy minister pointed out.

Fox said the government, for instance, will pay for a portion of the cost of mobilizing the equipment and personnel required to do the work.

In fact, while the abandonment of the three Apache wells and the one government well are technically separate projects, for the purpose of the screening by the assessment board, they have been combined into one file.

While there are some differences between the two project proposals, there are a great many more similarities and many of the project descriptions in the two 30-plus page proposal are almost identical.

Both proposals were prepared by the local Alexco Environmental Group.

Where one describes the history of the Kotaneelee gas field, so does the other.

The requirement for a maximum workforce of 99 is the same in both, as is the list of heavy equipment to be used and the need to provide a temporary camp.

Both proposals include the removal of the 18-room permanent camp as part of the well abandonment work.

Fox said the Yukon government will cover its share of the mobilizing and demobilization costs.

The proposals say the work will be done this year before Sept. 30 if the permits and approvals are received in time, otherwise it will be done next summer.

Fox said they don’t want to have to mobilize and demobilize twice, adding they are confident they’ll get it done this year.

It’s estimated abandoning the one well the government is responsible for will take approximately eight days, he explained.

The proposals note the wells will be closed in permanently.

All the above-ground equipment and hardware at each wellhead site will be removed.

The underground piping linking the well sites to the gas plant will be cut off at surface and left in place.

Fox said how extensive Apache’s next phase of decommissioning will be has not yet unfolded but it will involve reclamation and revegetation.

Whether the airstrip will be left intact or reclaimed has not been determined, nor has the future of the permanent bridge across the La Biche River, he explained.