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Oil giants contest Arctic relief well requirement Add to ...

Oil companies warn that exploratory drilling in Canada's Arctic waters will be stymied if the federal regulator continues to insist that they be equipped to quickly complete a relief well in the event of a blowout.

In submissions to the National Energy Board's Arctic inquiry, Chevron Corp. and ConocoPhillips Co. said there should be less focus on relief wells, and more on the industry's ability to prevent blowouts and regain control of rogue wells.

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However, environmental groups have told the board that emergency relief wells represent the last sure line of defence against the devastating impact of a blowout spewing oil for months, even years.

Nearly a year after BP PLC's Macondo blowout in the Gulf of Mexico, the National Energy Board has begun receiving submissions on how to minimize the risks from Arctic offshore drilling.

The federal Liberal Party has attempted to make the Arctic offshore into an election issue, including a pledge to halt all leasing and exploration activities in Canadian Arctic waters pending an independent examination of safety issues. While companies are not currently drilling there, they are pursuing seismic and other exploration activities, and the Conservative government has continued to hold lease sales for the Beaufort Sea.

At stake is the future of oil exploration in Canada's Arctic as companies are planning to move into deeper water and drill into more complex geological structures in their effort to find large quantities of oil or natural gas.

Companies like Exxon Mobil Corp.'s Imperial Oil Ltd., Chevron, Conoco and BP itself have committed to spend billions of dollars over the next decade in their hunt for oil and gas in the deeper waters of the Beaufort, though none are planning any exploratory drilling until 2014 at the earliest.

But the companies have urged the National Energy Board to drop a requirement that companies have the capacity to drill a relief well in the same season that they undertake their exploration drilling, to ensure a blowout is not left to spew crude over a long Arctic winter.

"The Canadian Arctic is an important future oil and gas region and one where over 80 exploration wells have been drilled to date without incident," Chevron Canada spokesman David MacInnis said Tuesday.

"The information generated from the drilling of those exploration wells provides Canada with a competitive opportunity among Arctic nations, all of whom are seeking to develop their northern oil and gas resources."

In its submission, Chevron argues it typically takes more than one season to drill an exploration well, even in the shallower water of the continental shelf. So the board's same-season relief well rule is not practical.

"The SSRW capability requirement as currently defined will likely not be feasible as exploration drilling moves into deeper water areas with more complex wells, and with more challenging ice conditions than were experienced in the initial phase of Canadian Beaufort exploration," the company said.

Instead, it says the regulator should set a performance standard that would achieve the same aim - that companies be able to stop the flow of crude within the same operating season, which can be as short as 50 days of open water.

Chevron is pioneering what it calls an "advanced well kill system," which would dramatically increase the capacity of traditional blowout preventers to cut through drill pipe and seal the well in the event of an accident. Conoco is proposing that companies deploy a separate blowout control unit on the sea floor that could be activated if the main blowout preventer itself fails.

The companies argue the relief well is a poor backstop, given that it takes months to complete one even in the best of circumstances. "The reliance on a relief well as the only mitigation option could, in many ways, result in the situation we are expressly trying to avoid, which is the potential for a large spill," Chevron said in its submission.

Environmentalists agree the companies should be required to adopt new technology that could choke off a blowout well before a relief well would be completed. But none of that technology has been proven to be fail-safe, and so relief well capacity is essential, argues a submission from Ecojustice and WWF-Canada.

"There is definitely a case to be made for other techniques, including improved blowout preventers and same-well intervention techniques," said William Amos, legal counsel for the groups.

"But there are very few offshore experts who would agree that relief wells are not necessary."

Mr. Amos said the groups are not calling for a total ban on offshore Arctic drilling, especially given the desire for development by the local Inuvialuit. "But it is up to industry to make the safety case for offshore drilling . . . and if they can't make it, the drilling should not be allowed."

 
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