Imperial wants Beaufort break

Gary Park

For Petroleum News

License-holders in the Canadian Beaufort Sea are bogged down in their exploration plans while the National Energy Board ponders new Arctic drilling rules.

As a result, Imperial Oil has indicated it will apply to Indian and Northern Affairs Canada to extend a nine-year lease, which it acquired in 2007 in partnership with its parent company ExxonMobil for C$585 million. The sister companies have since formed a joint venture with BP to work on two adjoining parcels.

Imperial spokesman Pius Rolheiser told the Globe and Mail that although a formal request has yet to be submitted, his company has told INAC an application will be made to reflect delays that result from “regulatory uncertainty.”

A year ago, Imperial asked the NEB to waive its requirement for a relief well to be drilled in the same season as an exploration well.

The NEB was in the midst of considering that request when the BP blowout occurred in the Gulf of Mexico, prompting the NEB to broaden its review.

Imperial has so far spent C$150 million to gather seismic data and make preparations for drilling.

It has said that a “substantial additional investment” is needed to acquire a drillship and complete a well, noting that regulatory delays will “further increase the costs and add to the already onerous inhibitions to development of Canada’s Arctic resources.”

Gaining an advance ruling on the relief well was deemed by Imperial to be important if it was to proceed with Beaufort drilling, which is seen as a possible springboard to opening a new northern basin.

Chevron Canada has also obtained rights for a C$103 million work commitment to explore in the Beaufort and is also seeking clarification of exploration and development regulations.

Trevor Taylor, policy director for Oceans North Canada, said the industry in Canada is not better prepared than that in the United States to deal with a major Arctic spill.

His group is affiliated with the Pew Environment Group which has urged the Obama administration to stand in the way of drilling in Alaska waters until there is clear evidence that the industry is able to deal with accidents.