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The Beaufort Sea shoreline near Tuktoyaktuk, in the Northwest Territories. (Rick Bowmer/AP)
The Beaufort Sea shoreline near Tuktoyaktuk, in the Northwest Territories. (Rick Bowmer/AP)

Imperial Oil leads push to drill deep in Canadian Arctic Add to ...

Major energy companies led by Imperial Oil Ltd. have applied to drill for crude in the Beaufort Sea, targeting an area that could require operations in the deepest water yet for the industry in the Canadian Arctic.

Imperial, Exxon Mobil Corp. and BP PLC filed a project description with regulators this month as a first step in the proposed drilling on two jointly held licences about 175 kilometres northwest of Tuktoyaktuk, NWT.

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“This would certainly be the farthest offshore, and deepest, that Imperial has ever drilled in the Beaufort,” Imperial spokesman Pius Rolheiser said in an interview.

It is too early to estimate what it might cost to drill wells on the ocean floor blocks, known as Ajurak and Pokak, where water depths can reach 1,500 metres, Mr. Rolheiser said. Early indications are that the partners would use a floating drill ship, according to the document.

Under the current schedule, drilling could start before the end of this decade. Imperial and Exxon each have 25 per cent of the venture, and BP the remainder.

Of the 92 wells drilled in the Beaufort to date, none has been under more than 68 metres of water, according to a development forecast prepared last year for Aboriginal Affairs and Northern Development Canada.

The companies pooled their Beaufort acreage in 2010 as offshore drilling came under intense scrutiny following BP’s Macondo rig explosion and oil spill in the Gulf of Mexico. The disaster prompted Canada’s National Energy Board to conduct a sweeping review of its offshore regulations.

A return to offshore drilling would bolster the NWT’s economy, which has failed to meet expectations as the $16.2-billion Mackenzie Valley natural gas venture ground to a halt due to the shift in North America toward shale resources located closer to market.

“This is the first step in the process, and we understand that,” said David Ramsay, the NWT’s Industry, Tourism and Investment Minister. “We’re anxious to see where we can get this ... we’re excited about the future when it comes to offshore.”

Some analysts have suggested that Arctic drilling will be made easier by longer seasons of open water due to global warming. This month, a 225-metre, ice-strengthened ship loaded with B.C. coal bound for Finland became the first bulk carrier to voyage through the fabled Northwest Passage, showing how sea conditions have changed.

Each of the joint venture’s wells is expected to take at least two years to drill, with about a 120-day operating season per year, Imperial wrote in its project description. Imperial filed the document with the Environmental Impact Screening Committee for the Inuvialuit Settlement Region and National Energy Board, the first part in a long regulatory process.

The last well drilled in the Canadian Beaufort was Devon Energy Corp.’s Paktoa C-60 in 2005 and 2006. Devon discovered 240 million barrels of oil, but has not developed the find.

One potential sticking point could be the NEB’s regulation that operators must plan for the drilling of a single-season relief well should there be a blowout. The board said it is open to alternatives, should they be proven effective.

Mr. Rolheiser said any such provision would be spelled out in future applications for specific wells.

Follow on Twitter: @the_Jeff_Jones

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