Plans to resume drilling in Canadian Arctic advancing: minister
Vancouver (Platts)--6Dec2012/257 pm EST/1957 GMT
A partnership of Imperial Oil, ExxonMobil and BP could file for
regulatory approval to restart exploration drilling in the Canadian Beaufort
Sea, with oil the primary target, as early as summer 2013, Northwest
Territories Industry Minister Dave Ramsay said Thursday.
The key players in the Canadian Arctic are "anxious to move forward and
are looking at the Beaufort as an opportunity" to ship oil to southern
Canadian and to US markets, bolstered by prospects of a major find in the
Canol shale play of the Central Mackenzie Valley, he said in a phone
interview from New Orleans.
Based on discussions this week with company representatives during the
Arctic Technology Conference in Houston, Ramsay said that following a delay of
several years while Canada's National Energy Board revised its rules for
Arctic offshore drilling, Imperial and others are ready to advance drilling
plans in an area estimated to hold 90 billion barrels of recoverable oil.
Article continues below...
Request a free trial of: Oilgram News
Oilgram News brings fast-breaking global petroleum and gas news to your desktop every day. Our extensive global network of correspondents report on supply and demand trends, corporate news, government actions, exploration, technology, and much more.
Imperial took a more cautious line, with spokesman Pius Rolheiser telling
Platts the company was not at the point of confirming a timetable for
regulatory filings or drilling.
Rolheiser said the three companies gathered 3-D seismic data from two
large exploration blocks in 2007 and 2008, formed their joint-venture in
mid-2010 and this year participated in geotechnical and environmental
baseline work along with ArcticNet, an international network of scientists
from universities and governments.
Aboriginal Affairs and Northern Development Canada issued new
exploration licenses to the partnership this year because of delays caused by
the Arctic offshore review, Rolheiser said, effectively restarting the clock
to give the companies five years to drill qualifying wells and gain a
four-year extension of their permits.
Of the two licenses, BP acquired one in 2008 for a work commitment of
C$1.18 billion ($1.19 billion) while sister companies Imperial and ExxonMobil
obtained their lease in 2010 for a spending pledge of C$585 million.
While the Mackenzie Gas Project, designed to ship up to 1.8 Bcf/d of
gas to more southerly North American markets, is held up indefinitely pending
an improvement in the gas price outlook, the focus in Canada's Arctic has
shifted to the Central Mackenzie Valley where spending on roads and well-site
preparations is expected to reach C$100 million this winter, Ramsay said.
Key operators in the area include MGM Energy, whose two exploration
licenses have a farm-in agreement with Shell Canada, which has also made work
commitments of C$137 million to secure two licenses of its own. The other
leading players are Husky Energy and ConocoPhillips Canada.
Ramsay said any oil found in the area would have access to markets
through a 40,000 b/d Enbridge pipeline that is currently operating at only
25% of capacity. The line from the Norman Wells oil field connects with the
rest of the North American pipeline network at Zama in northwestern Alberta.
The minister said there is also the possibility of a second oil pipeline
and a natural gas pipeline, which could carry gas for LNG export projects,
being built out of the Central Mackenzie Valley.
MGM president Henry Sykes told a recent Peters & Co. conference the
company is "very excited" about the extent of activity planned for the Canol
play this winter, which he described as "significant, given that this play
wasn't on the radar screen two years ago."
Husky drilled two wells last winter at its lease and completed 220 square
miles of 3-D seismic assessments over two exploration blocks adjacent to
Husky said it plans to further evaluate its two wells this winter and
build an all-weather road, which Sykes noted is a "very expensive"
undertaking, pointing to a level of commitment to the play.
--Gary Park, firstname.lastname@example.org
--Edited by Keiron Greenhalgh, email@example.com