Exploration in the Canadian Arctic Islands had, to the end of 1977, resulted in the discovery of 360 × 10⁹m³ (12.8 tcf) of marketable gas in seven fields, and one significant oil discovery. Two of the gas fields, Drake Point and Hecla, contain 152 and 104 × 10⁹m³ (5.4 and 3.7 tcf) of marketable gas, respectively, and are amongst the largest in Canada. Most of the exploration in the Arctic Islands has been carried out by Panarctic Oils Limited, a company established in 1966 by a consortium of mainly Canadian oil and mining companies and the Canadian Government.

The Franklinian (Pre-Cambrian — Late Devonian) and Sverdrup (Mississippian-Recent) basins, which underlie the Arctic Islands, are similar in many respects. They are both miogeosynclines which appear to have had a eugeosyncline to the north, separated by a geanticlinal ridge. Both basins contain a thick mega-cyclic sequence of sediments which is trangressive in its lower part (ranging upward from continental sands at the base through carbonates and evaporites to deep water open marine shales) and regressive in its upper part (basin-filling deltaic sands, silts and shales). During the transgressive phase, “reefing” occurred on the geanticlinal ridge along the northern edge of each basin. Excellent source and reservoir beds were deposited in both basins and there is ample evidence that large amounts of hydrocarbons have been generated and trapped. As in most basins, however, not all original accumulations have been preserved, and this paper attempts to illustrate how the geological development of the basins and three major, plus several minor, orogenies, affected original entrapment and the subsequent preservation, re-migration, alteration, or loss of these accumulations.