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Chevron Wins $101 Million Bid For Canadian Arctic Rights

Date: 09-Aug-10
Country: CANADA
Author: Jeffrey Jones

Chevron Corp has acquired an exploration license for the Beaufort Sea in Canada's Far North with a C$103.3 million ($101 million) bid as the country gets set to review offshore drilling following the BP oil spill in the Gulf of Mexico.

Indian and Northern Affairs Canada, which is responsible for oil and gas activity in the Arctic, awarded Chevron a 205,946 hectare (508,800 acre) block north of the Yukon coast and just east of the Canada-U.S. boundary.

The acreage was up for grabs as part of a 2009-10 call for bids and follows Chevron's last winning Beaufort acreage bid, a C$1 million package in 2007.

The company has yet to devise seismic and drilling plans for the new block, Chevron Canada Vice-President David MacInnis said. The plans will require approval by Canada's National Energy Board.

Chevron already had interests in 10 Beaufort discoveries, including 33 percent of the 1986 Amauligak find and 13 percent of the adjacent Issungak discovery.

Its latest acquisition comes after a nearly C$600 million acquisition of Beaufort Sea exploration rights in 2007 by Imperial Oil Ltd and Exxon Mobil Corp and a C$1.2 billion winning bid for acreage by BP Plc the following year.

Last month, the three formed a joint venture to explore on their parcels to avoid duplication of equipment and personnel in the remote, icy region.

MacInnis said Chevron was not part of that tie-up, but was open to looking for opportunities to work with other players in the industry.

Imperial said last week that the partners will not start exploratory work until after the NEB completes its review of offshore safety and environmental impact. The regulator announced the review in response to heightened government and public concern after the U.S. Gulf spill.

Chevron will participate in the proceedings, MacInnis said.

"We're looking forward to the review and putting forward some ideas as to how to improve performance and especially address questions that are coming up on oil spill prevention and containment," he said.

When the NEB announced the review in May, it canceled a planned hearing on a request from BP and Exxon to reexamine a requirement that Arctic drillers need to drill a relief well in the same season that an exploratory well is completed.

There is no date yet for when the review is to begin.

Chevron is operating Canada's only current offshore drilling project, the deep water Lona 0-55 well in the Orphan Basin off the coast of Newfoundland. It is expected to reach its target depth next month.

Chevron shares were down $1.04, or 1.3 percent, at $78.03 on the New York Stock Exchange.

(Editing by Peter Galloway)

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