Imperial Oil Ltd. shelved plans to drill in Canada's Beaufort Sea, saying it needs more time to study the Arctic's harsh conditions.
Calgary-based Imperial on Friday suspended all regulatory work and planned submissions tied to an exploration program with joint venture partners Exxon Mobil Corp. and BP PLC.
In regulatory filings, Imperial said it is in talks with the federal government to extend its existing exploration licences to 16 years. The permits cover offshore parcels about 175 kilometres north of Tuktoyaktuk, N.W.T. and are set to expire in 2019 and 2020, spokesman Pius Rolheiser said.
The extension would allow Imperial to complete technical work and research "specific to the unique operating conditions for drilling in the deepwater Beaufort Sea, with its limited drilling season, to ensure a viable program," Lee Willis, the company's exploration operations manager, said in a letter to the National Energy Board.
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.
Last year, Chevron Corp. put its Beaufort drilling plans on hold, citing the drop in oil prices.
The downturn has led to a sharp pullback in investment on numerous big-ticket projects, from Alberta's oil sands to Newfoundland and Labrador.
In the Arctic, Chevron and Imperial had each sought an exemption to existing NEB rules that compel companies to drill a so-called relief well in the same season as a producing one to mitigate a blowout or environmental disaster. Chevron had planned to drill an exploration well around 2020, but it said clearance to use alternative technology was crucial to moving forward.
Imperial, which is majority controlled by Exxon, had said the earliest a well could be drilled was the summer of 2020. The company's acreage includes water depths up to 1,500 metres - the deepest exploration targets yet in the Canadian Beaufort.
Activity in the northern region has been muted as industry spending focuses on U.S. shale plays and oil sands deposits in Alberta. Imperial recently started up a $9-billion expansion of its Kearl project that will double the mine's 110,000 barrel-a-day capacity.
In May, Royal Dutch Shell PLC received the all-clear from U.S. authorities to drill in the Chukchi Sea off Alaska's northwest coast.