Northern Cross Ltd. is reinvigorating its plan to refine crude oil in the Yukon to supply the territory's diesel and home heating fuel market, says the company president.

David Thompson said today from his Calgary office the decision to kickstart the proposal that went through a pilot project in 1998 at the company's Chance Discovery wells on Eagle Plain comes with changes in two key circumstances.

The high price of crude oil is certainly a factor, Thompson acknowledged. But equally, he added, is an upswing in the territory's economy the company is seeing, particularly renewed interest by the mining sector.

Thomspon said seven years ago, when North Cross conducted its pilot project, the Yukon's economy was contracting.

'It doesn't matter what the price of crude is if you don't have somebody to sell it to,' he said.

The 1998 program produced a bulk sample of crude, a load of which was actually tested in its crude form in a Yukon Energy diesel generator before its scheduled overhaul.

The generator, Thompson noted, ran to its full capacity while burning the Northern Cross fuel. There was also bulk sample delivered to the Alberta Research Council, so the company knows what it has.

He said Northern Cross is interested in pumping crude and building a relatively small refinery to serve the size of the Yukon's diesel fuel market, though there is some potential for the production of gasoline.

The project costs are still being evaluated, as is the possible location for such a refinery, he said.

'The ideal here is a Yukon approach to fuel supply, basically, to provide an element of fuel security and capture that industry in the Yukon,' he said. 'As far as a value added product, it is very important.'

Thompson said it's no secret that Northern Cross has had this goal, but it intends to begin the consultation process immediately with first nations and others to discuss the proposal before applying for the necessary permit approvals.

With the necessary permits, the company could potentially be working at the Chance Discovery wells this winter, he said.

Thompson said the initial step would involve a flow test of six months to a year to establish the long-term stability in flow rates that would be required, though the company is confident they exist.

If the flow rates are good, it would then be up to the company to make a decision whether to proceed, he said.

Thompson said crude from the flow test would be shipped south for refining.

'This is something we are seriously looking at.'

The company spent approximately $2.5 million on its 1998 project, and employed about 65 workers.

Meanwhile, Hunt Oil is also expressing a desire to conduct a $7-million or $8-million seismic program on its oil and gas disposition in the Eagle Plains area, Energy, Mines and Resources Minister Archie Lang said conference call from Calgary Thursday.

Lang was the keynote luncheon speaker at yesterday's seventh annual Far North Oil and Gas Forum.

He said he reiterated the message that the Yukon is working to ensure its regulatory regime is in order if and when projects like the proposed Alaska Highway natural gas pipeline go ahead.

But he also emphasized the importance to the territory of both the Alaska Highway pipeline and the proposed gas pipeline down the Mackenie Valley.

The Mackenzie Valley line, he said, is vital to ensure natural gas reserves in northern Yukon can get to the world market.

Pipelines would not only generate a huge impact during construction, but would also provide the territory with access to natural gas to for residential and commercial use, he told conference delegates.