Imperial Oil lays out preliminary plans to drill in the Beaufort Sea

CALGARY – Imperial Oil (TSX:IMO) has laid out its early-stage plans for drilling in the Beaufort Sea with its joint-venture partner, BP.

“No investment decisions have been made,” said company spokesman Pius Rolheiser. “These are the plans that we’re currently assessing and we wanted to share them as early as possible with the communities of the Beaufort.”

Imperial presented a preliminary information package to the Inuvialuit Game Council last week. The Inuvialuit have treaty rights involving both the Mackenzie Delta and the offshore.

The plans involve one or more exploration wells in two leases about 125 kilometres northwest of Tuktoyaktuk, N.W.T., in waters that range from 60 to 1,500 metres.

The document indicates that Imperial would continue to propose the use of a blow-out preventer, which would function like a cap to prevent oil spills in the case of an accident.

But in its review of Arctic offshore drilling regulations released in December 2011, the National Energy Board clearly indicated its preference for same-season relief wells, which would involve the immediate drilling of a second well in the case of a blowout to redirect the leaking oil.

Canada’s energy regulator will continue to require that oil and gas companies wanting to operate in sensitive Arctic waters be able to drill immediate relief wells to help contain blowouts.

“The applicant must demonstrate, in its contingency plan, the capacity to drill a relief well to kill an out-of-control well during the same drilling season,” the board’s guidelines said.

“An applicant wishing to depart from our policy would have to demonstrate how they would meet or exceed the intended outcome of our policy.”

Rolheiser says it’s not a formal regulatory filing, and that the companies have a long way to go before deciding officially to go ahead with drilling.

The document suggests the proposals could be through the regulatory process by the end of 2015. The partners would then have to make a decision as to whether to fund the wells or not.

In the document, Imperial says a decision to go ahead would require a significant financial commitment by the joint venture partners.

Martin von Mirbach of the World Wildlife Fund’s Arctic program urged the National Energy Board to hold on to its relief well requirement.

“Equivalency in this case is pretty unambiguous – it’s the proven capacity to stop an uncontrolled blowout before winter freeze-up,” he said. “We expect that the NEB will review this and all other proposals with that vitally important criterion in mind.”