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Chevron seeks heads-up from NEB Asks Canada’s NEB for advance ruling on proposal to end blowout in Beaufort, warns rejection could end its exploratory program Gary Park For Petroleum News
Chevron Canada has made it clear to Canada’s federal energy regulator that unless it can obtain an advance drilling authorization it will be unable to enter contracts to either lease or build a drillship and support equipment to explore its license-holding in the Canadian Beaufort Sea.
In the process it has joined an Imperial Oil-operated program in seeking some easing of the National Energy Board’s policy of dealing with an out-of-control well.
Chevron, in a letter to the NEB, said it is unable to make the necessary “significant capital commitments for specialized drilling and marine equipment with an advance NEB determination that the key building block” that its alternative to the NEB’s same-season relief well, SSRW, policy meet the regulator’s objective.
The company said its drilling plans for Exploration License 481, 150 miles northwest of Tuktoyaktuk in the Northwest Territories, are contingent on its proposed alternative well secure system, which it has previously indicated is a new-generation blowout preventer which it believes would make relief wells unnecessary.
Chevron has conducted a 3-D marine seismic program over 3,658 square kilometers of its Beaufort holdings, while Statoil has farmed-in on a 205,946 hectare (509,000 acres) deepwater parcel that Chevron acquired in 2010 for a work commitment of C$103.3 million.
Process not ‘operationally feasible’ Chevron said several companies, including itself, have made it clear that the NEB’s Arctic Offshore Drilling Review, AODR, process that was revised in 2011 may “not be operationally feasible or desirable for certain offshore locations.”
The NEB has said the intended outcome of its SSRW policy is to kill an out-of-control well in the same drilling season to minimize harmful impacts on the environment and has required that any company applying for a drilling permit must explain how it would meet the policy.
The regulator said that any applicant wishing to depart from the SSRW policy would “have to demonstrate how they would meet or exceed the intended outcome of our policy,” allowing decisions to be made on a case-by-case basis.
Chevron said it is currently advancing plans to drill an exploration well “subject to acceptable economic prospectivity” by about 2020.
The company said it has determined that “in the unlikely event of an uncontrolled blowout” the long period associated with completing a SSRW “would result in an unacceptably high release of hydrocarbons into the environment.”
In addition, it said an SSRW for its exploration license may “in certain combinations of ice conditions and well complexity, prove to be very challenging and, in some cases, impractical.”
Alternative well secure system As a result, an alternative well secure system to that offered by a relief well would be an integral part of its proposed drilling system and achieve the intended outcome of the SSRW policy, Chevron said.
Using the well secure system would require an Arctic capable drillship as well as up to three icebreaking vessels, which are in “extremely short supply globally” and likely require Chevron entering into five-year contracts starting in 2016-17.
Chevron has asked for confirmation from the NEB that the proposed well secure system is “equivalent” to SSRW capability, thus allowing Chevron to prepare detailed applications for drilling authorizations.
The company said the NEB, and the Inuvialuit Environmental Impact Screening Committee and possibly the Inuvialuit Environmental Impact Board, would then be in a position to weigh all of the relevant factors and decide whether to approve an exploration well.
Chevron said it hopes to prepare an SSRW equivalency application this year and make the filing in 2015 to gain an NEB ruling in 2016.
If the NEB decided the proposed well secure system does not meet its policy, Chevron could then “make an informed decision on whether or not to proceed with a drilling program for EL 481.”
The letter to the NEB said that “in order for companies to be able to make informed and efficient investment decisions, they need to understand the regulatory landscape that applies to them.”
That requires an understanding of whether the NEB considers Chevron’s well secure system is consistent with the intended outcome of the SSRW policy.
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