somali grandson: Canada offers Arctic option: relief wells, with some exceptions

Companies planning to explore Canada?s Arctic offshore region have been given a chance to show they can ?meet or exceed? the National Energy Board?s policy to kill an out-of-control well, otherwise the federal regulator will stick with its same-season relief policy.

In updating its rules, which included consideration of BP?s Macondo well blowout in the Gulf of Mexico, the NEB said in a 53-page report it remains determined to ?minimize harmful impacts? to the Arctic environment by requiring operators to sink a relief well in the same summer season that a well begins to leak uncontrollably.

But it has given companies a de facto exemption to demonstrate that they can apply new technologies to cap a blowout.

It is not yet clear whether that will open the way for Imperial Oil, ExxonMobil, BP and Chevron to file exploration applications in 2012 to explore their Beaufort Sea leases.

?Filing requirements set out the technical information we will need to see in future applications for offshore drilling in the Canadian Arctic,? said NEB chair Gaetan Caron.

?These new requirements provide clarity to future applicants and to those who will provide input into the board?s decision to approve or deny an application for a well in the Arctic.?

Chevron says not feasible

Imperial, as operator, and ExxonMobil each hold 25 percent of the Ajurak-Pokak joint-venture covering two deepwater exploration blocks in the Beaufort, with BP holding the remaining 50 percent. The partnership secured the rights by making combined work commitments of almost C$1.8 billion.

Chevron has two exploration licenses covering a total 1,200 square miles immediately west of the joint-venture properties and is hoping to start seismic work in the 2012-14 period.

In its submission to the NEB?s 18-month consultation with northern communities, the industry and environmentalists, Chevron said the same-season relief well requirement ?would likely not be feasible as drilling moves into deeper water areas, with more complex wells and with more challenging ice conditions than were experienced in the initial phase of Canadian Beaufort exploration 20 to 35 years ago.?

It said the NEB should require drillers to stop uncontrolled flows in the same season that they started, but not necessarily with a relief well.

Chevron has already indicated it is developing a new-generation blowout preventer which it believes would make relief wells unnecessary.

Imperial focused on prevention

James Hawkins, Imperial?s Arctic operations manager, said in a letter to the NEB that his company?s ?primary approach to well control is prevention.

?While it is important to have a relief well plan that has been subject to rigorous review and approval by the NEB, a requirement for same-season relief well capability is generally neither practical nor necessary,? he said.

But the leaseholders, along with ConocoPhillips, say they need more time to study what impact the new stipulations will have on their exploration plans.

However, the NEB does not rule out the use of enhanced prevention technology to avoid the same-season rule, although it said prevention alone will not suffice.

It said NEB panels will now determine whether companies can ?depart from? the relief well rule.

CAPP: Some flexibility

The Canadian Association of Petroleum Producers said the new rules offer some flexibility for companies to ?innovate and apply new technologies.?

In its submission, CAPP said 132 wells have been drilled in the Canadian Arctic, 89 in the Beaufort, with no significant oil spills.

Bharat Dixit, the NEB?s technical leader of exploration and production, told the National Post that the ice pack makes the Beaufort a ?closed ocean? for much of the year, which prompted the NEB to introduce its single-season relief well policy to prevent uncontrolled wells from leaking through the winter.

He said the NEB is confident drilling can be conducted safely in the Arctic provided companies follow recommendations on proper management and training, use a measured pace on development that includes ?pauses? before critical or dangerous work and have a proper spill response plan in place.

Trevor Taylor, policy director at the Pew Center?s Oceans North Canada group, said the NEB?s review is a ?positive first step,? although it is not clear ?what you need to do in order to drill in the Arctic.?

?The industry has been saying they can do it safely, so I think the ball is in industry?s court right now when it comes to demonstrating to regulatory bodies, the NEB in particular, that they?re able to meet requirements,? he said.

However, Taylor warned that ?there?s always going to be the risk? of a spill, adding: ?We?re not saying you shouldn?t drill at all. The risk has to be minimized to that extent that is reasonable.?

?Gary Park

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