INUVIK, NWT — Despite the glacial pace of progress of the proposed Mackenzie Valley gas pipeline, a new bright spot is emerging for energy development in
Canada’s North — some of the world’s largest companies are mounting in the Beaufort Sea the first deep water exploration program in an Arctic environment.
Imperial Oil Ltd. with its parent, Exxon Mobil Corp., and BP PLC, said Thursday they are hoping to find oil in recently acquired leases whose geology is similar to that of the prolific deep waters of the Gulf of Mexico and offshore West Africa.
Imperial oil started collecting seismic data last year, while BP will get a seismic program under way this summer. The information helps companies to assess drilling locations.
Imperial expects to drill its first well around 2013, while BP could follow up with its first well around 2014, the executives in charge of the programs said at the Inuvik Petroleum Show.
“It ranks right up there with our global new opportunity set,” Liz Jolley, exploration vice-president at BP, said on the sidelines of the annual event. “I think it’s a high quality opportunity, it needs a lot of seismic data, it needs a lot of consideration before we move to the next phase.”
Mike Peacock, exploration and development manager at Imperial, said new data and new technology have prompted his company to take a second look at the
Beaufort. A drilling boom in the 1970s and 1980s promoted by federal incentives resulted in many discoveries, but no production to date.
“We would like to make a discovery if possible,” Mr. Peacock said. “We would prefer an oil discovery than a gas discovery, it’s easier to develop.”
Two years ago, Imperial and Exxon Mobil committed to spend $585-million on the program in exchange for exploration rights, while BP last year committed to spend $1.2-billion.
Even if big pools are found, both executive said it would take a long time to bring them to market because they would require technology that is not yet available. One option is to load the oil onto tankers, removing the need for a pipeline.
“This is the first time that this type of deepwater drilling and potential development has been done in an Arctic environment,” Mr Peacock said. “This is new frontier ground.”
The companies said they try to collaborate when possible to reduce their environmental impact. The programs are complex because the licenses are in areas near massive blocks of ice where the drilling season is short.
The Mackenzie gas pipeline, years behind schedule due to regulatory delays, is threatened by new shale discoveries across North America that are faster and cheaper to bring to market. Onshore exploration is on hold until there is certainty the pipeline will go ahead.
Bob McLeod, Industry Minister in the Northwest Territories, said he hopes offshore exploration restores some optimism in the region, even if it doesn’t bring as many benefits as onshore programs.
“It brings a lot of excitement back into the oil and gas play, and it brings a lot of attention to the North,” he said. “You look around the world, a lot of the oil and natural gas are being discovered in the deep offshore.”
Devon Energy Corp. was the last company to drill in the Beaufort two years ago, but its target in shallow water was natural gas. Instead, it found a giant pool of oil for which it had no immediate plans.
Source: http://www.canada.com/Technology/Arctic+seen+frontier+ground/1710209/story.html