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Beaufort explorers press play
Chevron strikes third quarter plans for Beaufort Sea exploration; Imperial and other offshore lease holders continue to discuss plans to restore time lost during Arctic Offshore Drilling Review

Thandiwe Vela
Northern News Services
Published Monday, June 18, 2012

Offshore explorers are renewing exploration plans for the Beaufort Sea following the completion of the National Energy Board's (NEB) Arctic Offshore Drilling Review.

NNSL photo/graphic

Boats towing streamers which record seismic data during Imperial Oil Ltd.'s 2008 seismic acquisition on the Ajurak block, in the Beaufort Sea. - photo courtesy of Imperial Oil Ltd.

While the major oil and gas companies that hold exploration licences in the Beaufort Sea are still working through the guidelines in the board's Review of Offshore Drilling in the Canadian Arctic, and some of the stricter terms have been described as unfeasible, plans have been struck to continue tapping into the "significant potential" of the Beaufort Sea-Mackenzie Delta Basin, which is said to contain an oil resource of 13.4 billion barrels of recoverable oil, and a gas resource estimated at 66 trillion cubic feet.

"Certainly the Mackenzie-Beaufort the potential there is much higher than the mainland territories," said Kenneth Drummond, chief geologist of Calgary-based Drummond Consulting, who has studied the Mackenzie Valley, Mackenzie Delta and Beaufort Sea for several years. "The Mackenzie-Beaufort is extremely good, its potential is very high, and a lot of this particularly in the Beaufort Sea deep water areas," he said. "And the land bonuses that have been put up there suggests there is significant interest and the potential is probably very high."

BP Canada is the largest lease holder in the region, with exploration work planned for two adjacent parcels in the deep water off the Beaufort Sea, held in a joint-venture with Imperial Oil Ltd.

Imperial is the operator of the two leases, which are about half a million hectares each, under a joint venture agreement signed in July 2010 to share exploration and potential development work on the two leases. One of the leases, called Ajurak, was jointly acquired by Imperial and ExxonMobil Canada in 2007 for a work commitment of $585 million, and the second lease, Pokak, was acquired by BP Canada the following year for a work commitment of $1.18 billion.

Three-dimensional seismic and geotechnical work was conducted on both Imperial and BP’s holdings in the Beaufort Sea before 2010, when exploration work was halted on the NEB's announcement of its comprehensive drilling review, prompted by the 2010 oil spill disaster in the Gulf of Mexico.

"Obviously, we halted any detailed planning on further exploration activities awaiting the outcome of that review," said Pius Rolheiser, spokesman for Imperial Oil, adding, "Imperial was an active participant.

"We have a strong commitment to environmental protection, to safety, and to well control particularly in an environment like the Beaufort Sea and we're obviously committed and pleased to continue to work with the NEB, the other regulators and with the Beaufort communities as we proceed with further planning for exploration activity on those leases."

Imperial has not yet announced its exploration plans following the offshore review, but continues to be in discussions with the federal government along with other Beaufort lease-holders on a potential plan to restore time lost as a result of the review.

The terms of the nine-year exploration licences require a well to be drilled within the first five-years of issue.

Chevron Canada Resources holds two exploration leases in the Beaufort, including EL 460, a 2,060 square kilometre block located 120 kilometres offshore in water depths ranging from 800 to 1,800 metres, which was awarded in July 2010 with a work expenditure bid of $103.3 million.

In a farm-out arrangement with international energy company Statoil, a 3D seismic program on Chevron's leases in the Beaufort Sea is scheduled for the third quarter of this year, said Leif Sollid, Chevron spokesman. Chevron will be the operator of the program, with 60 percent equity interest and Statoil will have 40 per cent. The results of the seismic program will guide further exploration on the block, said Sollid, adding Chevron currently has no plans to drill in the Beaufort Sea.

Currently, there is no offshore drilling in Canada’s Arctic and there are no applications for drilling before the NEB. While a number of companies hold explorations and significant oil and gas discovery licenses onshore and offshore in the Beaufort Sea, they would need to respond to the newly released filing requirements in their applications for drilling.

Some of the requirements have been unofficially contested, particularly with regards to well control measures.

"Chevron maintains its position that same season relief well capability will 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 20 - 35 years ago," Sollid stated in an email to News/North. "For this reason, Chevron believes alternative well control and oil spill intervention technologies will need to be considered as an equivalency to a same season relief well in floating drilling operations."

The company plans to continue working with the regulatory bodies and the Inuvialuit--whose region the Beaufort Sea is within, as it proceeds into the next exploration drilling phase in the Beaufort Sea.

The most recent figures for the Beaufort Sea-Mackenzie Delta Basin, presented in 2009 by the Geological Survey of Canada, indicate an oil resource of 13.4 billion barrels of recoverable oil and a gas resource estimated at 66 trillion cubic feet.

According to the Department of Aboriginal Affairs and Northern Development Canada, estimates of potential remain conceptual due to the area of exploration interest now extending to waters as deep as 3,000 metres which have not been tested by drilling.

In April, Aboriginal Affairs and Northern Development Canada launched a call for bids on six more parcels in the Beaufort Sea and Mackenzie Delta area, following a call for land nominations.

The new call for bids "suggests a lot of interest in the region," said Travis Davies, spokesman for the Canadian Association of Petroleum Producers.

The closing date for bids is Sept. 6.

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