Chevron has said it is canceling plans to drill for oil in the Beaufort Sea in Canada's Arctic because of economic uncertainty in the industry as oil prices fall.
Beaufort Sea map. From Chevron.
The move follows Husky Energy's decision to defer an investment decision on the West White Rose project offshore Atlantic Canada. COO Rob Peabody said the firm was going to evaluate cost efficiencies on a proposed platform for the field.
Oil prices hit a five year low this week, sliding below US54/barrel for the first time since May 2009, putting many projects under pressure, not least already costly Arctic exploration efforts. The fall in prices over the last four months will put pressure on exploration projects worth more than $150 million, Norwegian analysts Rystad said earlier this month.
In a letter to Canada's National Energy Board (NEB), the company said it withdrew from a hearing into Arctic drilling rules because it is delaying indefinitely any plans to drill in the exploration license (EL) 481 block, about 250km northwest of Tuktoyaktuk.
The company has indicated an interest in drilling an exploration well by 2020, according to the NEB.
According to Chevron, the firm two exploration licenses in the Beaufort Sea, EL 480 and EL 481. It owns and operates the first and it has a 60% interest in and operates the second. In 2013, we evaluated 3-D seismic data from the second license, shot in 2012.
Chevron also acquired an additional 4.6% interest in the offshore Amauligak discovery, bringing Chevron’s total non-operated working interest to 40%. The company said it is assessing development alternatives for Amauligak. Chevron has an Arctic Center in Calgary, Alberta.
According to a Beaufort Regional Environmental Assessment, Canadian offshore drilling in the Beaufort Sea began in the early 1970s. NEB records show 142 Canadian Arctic offshore wells have been drilled, with 92 of these wells drilled in the Beaufort Sea region. Historical well records show that the industry operated in an extremely harsh environment, where drillships were often forced off station by heavy ice. Records also show that numerous well kicks and wellhead gas and water flows were encountered and controlled.