Chevron Corp. has shelved plans to drill a multimillion-dollar deep-water well in Canada’s Beaufort Sea, blaming the sharp drop in oil prices that has forced deep spending cuts across the energy industry.
California-based Chevron filed a notice with the National Energy Board on Wednesday withdrawing its application for an alternative to a same-season relief well. The company had said clearance to use other technology was crucial to moving forward with plans for drilling on its offshore block, known as EL481.
“It means that, given the overall economic environment for Chevron’s global corporate projects, we’ve decided to put our drilling plans on hold for EL481 on hold at this time,” said Leif Sollid, spokesman for the oil major’s Canadian unit.
The company had previously said it could drill a well around 2020, assuming it got the necessary approvals. It acreage is about 250 kilometres northwest of Tuktoyaktuk, N.W.T.
The NEB in July began reviewing proposals from Chevron as well as a consortium led by Imperial Oil Ltd. to avoid having to show they can drill another Arctic offshore well in the same season as their initial ones to deal with a blowout or other environmental mishap.
The dramatic fall on oil prices has forced the oil industry to rethink numerous big-ticket projects.
There has been little offshore drilling in the Beaufort in the past 25 years, and before that, most activity took place close to shore. Proposed deep-water wells would likely cost well over $100-million.
For its part, Imperial said it remains committed to seeking regulatory approval for its Beaufort plans with joint venture partners Exxon Mobil Corp. and BP PLC. Their blocks are about 175 kilometres northwest of Tuktoyaktuk.
“We’re in the early stages of assessing potential and no business decisions have been made to this point,” Imperial spokesman Pius Rolheiser said.
“But we are continuing to pursue regulatory and other work related to that initiative. Given the current outlook for the regulatory process and other work that needs to take place, the earliest we’d be in a position to begin drilling a well would be the summer of 2020.”
At water depths up to 1,500 metres, such wells would be the deepest ever drilled in the Canadian Beaufort. Of the 92 wells drilled there to date, none has been under more than 68 metres of water, according to a development forecast prepared in 2012 for Aboriginal Affairs and Northern Development Canada.
(With a file from Jeff Lewis in Calgary)Report Typo/Error