BP, ExxonMobil, and Imperial Oil form joint venture in Arctic

BP, ExxonMobil, and the latter’s Canadian subsidiary, Imperial Oil, are joining forces to drill for oil in the Arctic. BP’s $1.18 billion Exploration License 449 (also known as Pokak) allows it to drill in a region 75 miles north of Inuvik, the Northwest Territories. Exxon’s $600 million Exploration License 446 (also known as Ajurak) would allow it to drill close to BP’s site, 90 miles north of Inuvik. BP will own 50% of the joint partnership, while ExxonMobil and Imperial Oil will each have a 25% share.

All three companies began working together last year to coordinate their activities in the Beaufort Sea, though none of them have begun any exploratory drilling yet. No real drilling will likely take place until after 2014, as Canada’s National Energy Board looks into the safety of offshore drilling. So far, only 3D seismic data has been gathered on the two sites, as BP’s info sheet explains. An Inuvialuit business called Veri-Illuq Geophysical Limited has been contracted to provide logistical support for the scientific efforts.

Meanwhile, Canadian regulators are warning that it could take up to three years to dig a relief well to contain an oil spill in the Arctic. The time to stop the flow of oil there is almost 13 times as long as the 87 days it took to cap the Deepwater oil spill in the Gulf of Mexico. This is because while drilling the oil well would actually only take 100 to 120 days, a figure similar to BP’s estimate as to how long it would take the company to drill a relief well in the Gulf of Mexico’s seabed, there are not as many continuous days for drilling in the Arctic due to treacherous, icy conditions. In the Beaufort Sea, the open water season is a mere 50 to 85 days long. This new information on the amount of time needed to drill a relief well could impede plans to drill in the Arctic, since the Canadian government has enforced a “same-season relief well” policy since the 1970s. Imperial and the Canadian Association of Petroleum Producers have appealed to the National Energy Board before to try to remove this regulation for the Beaufort Sea, which all but makes legal drilling impossible. They claim that drilling technologies are now safe enough that no such relief well would be necessary. BP has also said that the same-season relief well rule “ought to be rescinded and replaced by a series of goal-oriented regulations” focused more on prevention.

News links

“BP, Exxon to Team Up in Arctic,” Wall Street Journal

“Firms team up in Arctic,” Calgary Herald

“Canada offshore in doubt,” Petroleum News

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