A major ownership shift has occurred in nascent exploration in the Canadian Beaufort Sea, with word that sister companies Imperial Oil and ExxonMobil have formed a joint venture with BP to continue work on two adjoining parcels.
News of an agreement was disclosed by Indian and Northern Affairs Canada, which must formally approve the transfer of operatorship on Exploration License 449 from BP.
EL 449 was acquired two years ago by BP for a startling work commitment of C$1.18 billion, while EL 446 was secured by Imperial and ExxonMobil a year earlier for a pledge of C$585 million.
Under the deal, BP will hold 50 percent of the partnership, with the balance divided equally between Imperial and ExxonMobil, one of which will be operator.
Negotiations between the two sides started in 2009, predating BP’s Macondo well blowout in the Gulf of Mexico that has placed a cloud over its future as an offshore operator.
The parcels are in water depths ranging from about 265 feet to 4,000 feet and are about 70 miles to 85 miles north of Inuvik, Northwest Territories.
Imperial spokesman Pius Rolheiser said neither oil nor natural gas has been established as the primary target of the exploration program.
“We are aware of other situations (in the Canadian North) where companies went looking for oil and found gas, or vice versa. Our target would be viable hydrocarbons.”
He said decisions on “future exploration activity have yet to be made,” although Imperial Chief Executive Officer Bruce March said in a speech in May that “we are at least four to five years out from ever drilling a well.”
To date, Rolheiser said, Imperial and ExxonMobil gathered 3-D seismic data in summer 2008 and BP did the same in 2009.
In addition, he said, Imperial has independently engaged in marine, field and technical data gathering, including scientific collaboration with a number of industry, government and Inuvialuit organizations in the Beaufort area, while consultations are occurring with Inuvialuit organizations.
Offshore regulations under review
What happens next will be heavily influenced by a comprehensive review of offshore regulations by Canada’s National Energy Board, which depends partly on what is learned from the cause and response to the Macondo events.
For now, Imperial, ExxonMobil, Chevron Canada, Royal Dutch Shell, ConocoPhillips Canada and MGM Energy have asked the NEB to reconsider its same-season relief well requirements, although BP Canada President Anne Drinkwater told a House of Commons committee in May that BP was not rejecting the option of drilling a relief well despite the “technical challenges.”
Imperial said the emphasis should be on preventive measures, pointing out that Beaufort wells are multiyear operations.
In a 1990 hearing involving a Gulf Canada Resources (now ConocoPhillips Canada) application it was estimated that a Beaufort blowout could release 40,000 barrels per day for 45 days into an area from Tuktoyaktuk to McKinley Bay on the north side of Richards Island — many times more than what was released from the Exxon Valdez. Gulf Canada also conceded at the time that it might not have the financial ability to cover the costs of cleanup and restoration.
That application was rejected, with the Inuvialuit Environmental Impact Review Board ruling there was a “startling lack of preparedness” by Gulf Canada and the Canadian government to deal with a Beaufort blowout in an open waters season.
Gulf made the 1984 Amauligak discovery in the Beaufort that is estimated to contain 360 million to 380 million barrels of oil and 2.3 trillion cubic feet of gas. The next find was reported by Devon Canada in fall 2007, claiming 240 million barrels of recoverable oil from its Paktoa C-60 well.
—Gary Park
