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Canada's deep, arctic waters attract big oil

Several of the world's largest oil and gas producers are extending their reach into the deep-water Canadian Beaufort Sea

They are confident they can make discoveries on a grand scale and handle whatever measures governments and regulators may impose in the aftermath of BP's Macondo well blowout. BP is one of the main players in the Beaufort, along with ExxonMobil and its 69.6% subsidiary Imperial Oil, Chevron Canada, Shell, ConocoPhillips Canada and Devon Energy.

Although only 90 wells have been drilled in the Beaufort, 28 of them yielding Significant Discovery Licences based on evidence of hydrocarbons that could be produced over a sustained period, the region has been assigned mean recoverable resources of 7bn barrels of oil and 70 trillion cubic feet (cf) of gas. Geologists estimate the Canadian section of the Beaufort has about 100 structures trapping substantial amounts of oil and gas.

Only one well, Devon's estimated 240m barrel oil find in 2006, has been drilled in the past 26 years, but interest in the play is quickening. Lured by the long-range potential of the Beaufort, a partnership of Imperial and ExxonMobil has formed a joint venture with BP to explore two adjoining parcels, acquired in 2007 and 2008, for combined work commitments of C$1.8bn ($1.7bn). Chevron joined the line-up in August, with a successful bid of C$103m for 0.509m acres just west of the joint-venture property.

None of the companies will say whether it is in pursuit of oil or gas, limiting their disclosures to plans for gathering 3-D seismic data. Imperial says it is at least four to five years away from drilling a well, spurning reports that contracting a drillship is imminent.

The customary caution has only been intensified by the outcome later this year of a comprehensive review the National Energy Board (NEB) has ordered into Arctic offshore drilling, based partly on what it learns about the cause of, and response to, the Macondo spill.

Six companies with interests in the Beaufort have asked the NEB to reconsider its requirements for relief wells to be drilled in the same season that a blowout occurs, pointing out that drilling is difficult if not impossible because of the extreme weather conditions.

Although Gulf Canada Resources (which made the 1984 Amauligak find of 380m barrels of oil and 2.3 trillion cf of gas and has since been taken over by ConocoPhillips) estimated in 1990 that a Beaufort blowout could release 40,000 barrels a day over 45 days, Imperial has told the NEB there is only a 0.0001% chance of an uncontrolled hydrocarbon flow using all available options on board a drillship in the Beaufort.

But this is an old game that oil companies play to try to confuse the public into believing everything is OK, says John Bennett, executive director of Sierra Club Canada, an environmental group.

Chevron is to suggest new methods for ensuring responsible development of northern resources, signalling its belief that the Beaufort is a future oil and gas producing region. The major is developing a new-generation blowout preventer it hopes will make relief wells unnecessary.

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