Chevron cancels Beaufort plans

Chevron has shelved indefinitely plans to drill for oil in the Canadian portion of the Beaufort Sea until price-driven uncertainty in the industry is resolved.

In a letter to Canada’s National Energy Board, the company said that as a result it has pulled out of scheduled technical hearings on Arctic drilling rules.

The cancellation affects Exploration License 481, 150 miles northwest of Tuktoyaktuk, Northwest Territories, where Chevron had hoped to drill a well by 2020.

Of its two exploration licenses in the Beaufort, Chevron owns and operates EL 480 and has a 60 percent operatorship stake in EL 481, with the other 40 percent farmed out to Statoil in return for the Norwegian company paying a share of a 3-D seismic program which covered almost 800 square miles.

Chevron paid C$103.3 million in 2010 for rights to explore 509,000 acres in the Beaufort.

Chevron has also acquired a 40 percent non-operated working interest in the Beaufort’s Amauligak oil discovery made by Gulf Canada in the 1980s. The company also has an Arctic Center in Calgary.

Imperial still working plans

Both Chevron and Imperial had asked the NEB to consider granting drilling applications in two stages - one in advance of a ruling on whether proposed well-control systems were equivalent to the regulator’s insistence on single-season relief wells, followed by detailed applications for drilling authorizations.

Chevron has made it clear that unless the NEB approved that request it would be unable to make significant spending commitments to enter contracts to either lease or build a drillship and support equipment.

It said a new-generation blowout preventer would make relief wells unnecessary, but the NEB has yet to determine the process it will use for its technical proceedings.

- Gary Park