Exxon, BP Defer Canadian Arctic Drilling
By Aiswarya Lakshmi
June 27, 2015
As Imperial Oil, as senior partner in the northern venture with ExxonMobil and BP, told Canada’s National Energy Board (NEB) that the exploration program has been deferred, the plan to revive arctic gas and oil drilling in deep Canadian waters of the Beaufort Sea ground to a halt.
The slow pace of regulatory review has left too little time to finish the approval process and does the work before the group's drilling leases expire, Imperial said in a filing at the board.
The partners – Calgary-based Imperial, Exxon Mobil and BP – have asked Canadian officials for seven-year extensions of Beaufort Sea exploration licenses that are currently scheduled to expire in 2020, reported Reuters.
The joint venture partners concluded they will not be able to complete predrilling work in time to drill a well by 2020.
The move represents a setback for oil companies active in Canada’s arctic waters and follows a similar decision by Chevron Corp. in December to halt its own exploratory drilling program in the Beaufort Sea. Those projects have been stymied by regulatory hurdles and some of the world’s highest extraction costs.
“Imperial Oil’s decision to defer its Arctic oil drilling plans in the Beaufort Sea is good news for the Arctic and people all around the world. Drilling in icy waters is extremely technically challenging, and if it is permitted to happen an oil spill is all but inevitable,” Farrah Khan, a Greenpeace Canada Arctic campaigner, said in a statement.
For the industry, the decision is likely to push efforts to tap undersea crude deposits in the Beaufort Sea well into next decade, underscoring the operating and technical challenges associated with drilling in the high Arctic.
The Arctic holds billions of barrels of untapped oil reserves, but offshore-drilling costs there are among the highest in the world because of its remote location and severe weather.
