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Canada's Imperial Oil, with ExxonMobil and BP Canada as joint-venture partners, has formally applied for regulatory approval to explore in the Canadian sector of the Beaufort Sea.

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Imperial spokesman Pius Rolheiser said in a phone interview Monday that assuming approvals are granted an investment decision could be made in 2016 and drilling could start on one or more exploration wells in summer 2020 within two exploration license areas that carry combined auction commitments of C$1.76 billion (US$1.71 billion).

"Based on the potential we see, we decided to proceed to the next step, although we've not made any decisions to drill," he said.


Rolheiser said the area is "potentially prospective for exploration, but it has a high degree of exploration uncertainty and has significant challenges."

The project description said 3-D seismic programs were conducted by Imperial and BP in 2008 and 2009, while all three partners were involved in gathering field data in the 2009-2011 period.

It said historical data indicates that ice conditions in the proposed development area are manageable for a drilling program of about 120 days, from May to November. The Imperial-operated venture is at the leading edge of possible revival of Beaufort exploration, which has included 92 wells that have so far yielded two major discoveries -- the 1984 Amauligak strike by Gulf Canada Resources, since taken over by ConocoPhillips and estimated at 235 million barrels of oil and 1.36 Tcf of natural gas, and a 2005 find by Devon Energy, reported to hold 240 million barrels of oil. Neither has advanced to commercial development plans.

Chevron Canada is evaluating results from its 2012 seismic program covering 1,412 square miles, 145 miles northwest of Tuktoyaktuk on the shores of the Beaufort.

Norway's Statoil has farmed in on a 508,000-acre parcel in the Beaufort, which is west of the Imperial joint-venture exploration licenses 476 (Ajurak) and 477 (Polak), acquired originally by BP.

The water depths in the joint-venture program can reach about 5,000 feet, and target subsea vertical depths are 12,500 feet to 22,300 feet.

Rolheiser said the license areas, which are about 110 miles northwest of Tuktoyaktuk, would be the farthest offshore and deepest that Imperial has ever drilled in the Beaufort.

The project description has been filed with the Inuvialuit Environmental Impact Screening Committee, which acts as adviser to Canada's National Energy Board, and the Northwest Territories government.

The Northwest Territories goverment is eager to see a revival of Arctic exploration as it moves towards gaining jurisdiction over development of its natural resources from the Canadian government in 2014.

NWT Industry Minister David Ramsay told Platts his government is now "anxious" to see how far the Imperial venture can proceed, given its importance to the regional economy since the sidelining of the Imperial operated Mackenzie Gas Project. That project had been designed to ship up to 1.8 Bcf/d of natural gas to southern Canadian and US markets.

The next three years, building up to a final investment decision in 2016, could include a public environmental hearing, authorizations for drilling operations, agreement on a plan to employ and train Canadians and northerners and a program to dredge and install facilities at Tuktoyaktuk Harbor.

The application said that given the water depths and anticipated conditions in the Beaufort, the partners agree that a floating drilling unit is their choice.

Still to be resolved is how the partnership would comply with a National Energy Board regulation, which followed by BP Macondo well rig exploration and oil spill in 2010, that operators must be prepared to drill a same-season relief well if there is a blowout.

Imperial said its primary well-control approach, which will be outlined in future applications for specific wells, is prevention, including wells designed for the range of expected risk.

Industry interest in Canada's Arctic region, despite a flurry of drilling in the Central Mackenzie Valley (CMV), is otherwise lukewarm.

Aboriginal Affairs and Northern Development Canada reported the annual call for bids in the CMV that closed September 19 yielded only two successful bids, with four other parcels bypassed.

High Level Energy bid C$18 million for 100 percent of a parcel covering 200,000 acres, while International Frontier Resources landed rights to a lease covering 163,000 acres for C$1.2 million. The leases require qualifying exploration work within five years to gain an extension to a nine-year permit.

--Gary Park, newsdesk@platts.com
--Edited by Derek Sands, derek.sands@platts.com