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Slow Regulatory Review Halts Beaufort Sea Plans of Imperial, Partners

A plan to revive arctic gas and oil drilling in deep Canadian waters of the Beaufort Sea ground to a halt Friday.

Imperial Oil, as senior partner in the northern venture with ExxonMobil and BP, told Canada’s National Energy Board (NEB) that the exploration program has been deferred.

The slow pace of regulatory review has left too little time to finish the approval process and do the work before the group's drilling leases expire, Imperial said in a filing at the board.

The leases, from Canada's federal government in Ottawa, run out in 2019 and 2020. The regulatory process started as a routine technical review soon after the drilling rights were granted in 2007 and 2008.

The arctic case escalated into a national public inquiry after BP's 2010 Macondo well blowout in the Gulf of Mexico. The warm water accident raised Canadian concern about offshore safety and aroused fear that a mishap and spill in arctic cold, ice and darkness would have even worse consequences.

After years of study and debate the NEB agreed to consider advanced technology substitutes for a traditional Canadian frontier safety rule that the exploration trio said would not work in deep areas of the Beaufort.

The old regime required exploration groups to be capable of drilling a second relief well, to siphon off a blowout safely, in the same work season as an accident. Formal review of proposed substitutes was scheduled to start this fall.

All regulatory work and submissions are being suspended, Imperial told the NEB. The exploration proposal will stay in the deep freeze while the drilling consortium seeks an extension of the arctic offshore leases' lifespan to 16 years, making them last until the mid-2020s.

During the forthcoming discussions with federal mineral leasing authorities, Imperial promised to "conduct additional technical studies and research specific to the unique operating conditions for drilling in the deep-water Beaufort Sea, with its limited drilling season, to ensure a viable program."

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