Natural gas reserves in northern Yukon aren't likely to be used for anything if the Mackenzie Valley or Alaska Highway pipelines don't go ahead, says an industry analyst.

David Dunn of Calgary's Fekete Associates Inc. said last week it would not be feasible to drill for the natural gas if the pipelines are not built, unless there was some major mine or other industrial development in the immediate area.

But if the Mackenzie Valley pipeline does go ahead, Yukoners can expect to see an increase in exploration activity on Eagle Plain in a couple of years; an application to build a lateral line linking the Eagle Plain to the Mackenzie Valley line in five years; and the export of the territory's natural gas by 2017, Dunn said.

'That we would see north Yukon, as a logical development, would come on about three years after the Mackenzie Valley comes on line.'

Fekete Associates was hired by the Yukon government and the three northern Yukon first nations to assess the potential for oil and gas development in the North, at a cost of $75,000 to $80,000 paid by the Yukon government.

The exercise was part of the overall planning initiative undertaken by the Yukon, the Vuntut Gwitchin First Nation of Old Crow, the Trondek Hwech'in First Nation of Dawson City and Mayo's First Nation of Nacho Nyak Dun.

It was noted the working group formed under Northern Yukon Economic Development Partnership Agreement is expected to soon be releasing the initial draft of its findings.

Speaking by speaker phone at a briefing April 11, Dunn said any exploration and development for natural gas resources in northern Yukon will begin in on the Eagle Plain basin, which is estimated to hold over half of all the gas reserves in the North.

Current estimates show the Eagle Plain basin has six trillion cubic feet of natural gas, Dunn pointed out, suggesting that with increased exploration, there typically come more reserves.

But even with just half or three trillion cubic feet, it would be financially feasible to build a pipeline linking the basin to the Mackenzie Valley line, Dunn said.

He said there are four options to pipe natural gas out of the North;

• Go east with a 350-kilometre line from Eagle Plain to Inuvik at an estimated cost of $822 million in today's dollars.

• Go east with a 400-kilometre line from Eagle Plain to Little Chicago, a point on the Mackenzie Valley line south of Inuvik where there are plans for a compressor station, at a cost of $1.6 billion, given the more challenging terrain conditions.

• Go west to Tok, Alaska with a 513-kilometre line to tie into the proposed Alaska Highway pipeline, at an estimated cost of $1.3 billion.

• Go south with a 750-kilometre line to tie into the Alaska Highway pipeline at Whitehorse, for an estimated $1.5 billion.

'The most logical way for north Yukon is to tie into the Mackenzie Valley pipeline,' Dunn said.

He said the natural gas resources in the Yukon's north will most certainly stay put until a major main line is built linking the north to the southern markets.

The Yukon's relatively low energy requirements eliminates any likelihood of an expensive pipeline from the north to Whitehorse, simply to meet local energy needs, he said.

The National Energy Board is currently holding hearings into an application for construction of a Mackenzie Valley pipeline.

Dunn predicts that with pipeline approval will come increased exploration, to a point at somewhere around 2011 when there'll be enough proven reserves to justify an application for a smaller, 50-centimetre (20-inch) pipeline linking Eagle Plain with either Inuvik or Little Chicago.

There's a temporary slowdown in activity as the application is processed, but with approval of a lateral link will come more exploration and development.

Given current estimates, the Eagle Plain basin could supply enough natural gas to keep the line full until 2044. In the meantime, there would be increased activity to prove and develop gas resources in neighbouring basins, Dunn suggested.

It's estimated there is a total of 11.3 tcf of gas in north Yukon, compared to 52 tcf for the Mackenzie Valley delta and Beaufort Sea, and 126 tcf on Alaska's North Slope.

Dunn pointed out that should a lateral line be built, there would be capital investment and ownership opportunities for the first nations, just as there are in the construction of the proposed Mackenzie Valley line.

Annual royalties from a lateral line would hit $90 million by 2020, though the vast majority would flow to Ottawa.

And while construction of a lateral line would generate a noticeable surge in employment, it would not last long, Dunn noted. He did point out, however, there would remain an additional 200 full-time jobs related to the natural gas and oil field work.

Dunn said while there is not a huge oil resource in the North, Northern Cross, which has drilled in the Eagle Plain area, has identified enough to sustain a flow of 2,500 barrels per day.

Northern Cross has mentioned its interest in the potential for a small refinery on site to supply the Yukon's needs.

Dunn said if a pipeline were to go ahead, Northern Cross would have enough to supply all fuel needs related to construction, as well as enough to meet all of the Yukon's requirements for refined crude oil products.

Hugh Monaghan, a representative of the Vuntut Gwitchin First Nation, said the report by Fekete Associates has provided the working group a perspective on the potential for future development.

It is a piece of work that can be used in the working group's overall review of economic development opportunities in northern Yukon, he suggested.