REFILE-Northern Canada eyes BP oil spill technology

Wed Dec 5, 2012 6:15pm EST

* Minister study monitoring, capping technology

* Hopes gear can be used to address relief well rules

* BP has Beaufort Sea acreage with Exxon, Imperial

By Jeffrey Jones

CALGARY, Alberta, Dec 5 (Reuters) - Canada's Northwest Territories is studying oil well monitoring techology used by BP Plc in the Gulf of Mexico following its 2010 oil spill there in hopes that it can be applied to Arctic wells, the Territories' industry minister said on Wednesday.

David Ramsay, minister of industry, tourism and investment in the resource-rich and sparsely populated territory, said it may be possible that such gear can be used to satisfy Canadian regulators, who reviewed regulations for offshore oil and gas operations in the Arctic following BP's Macondo disaster.

Ramsay toured BP monitoring facilities this week in Houston, where he also spoke at an event hosted by the Canadian consulate.

The Northwest Territories is seeking investments in oil and gas as a way to bring economic benefits to a region that suffers from high unemployment. A long-sought pipeline to move gas from the onshore Mackenzie Delta to southern markets is years behind schedule.

"They (BP) are going to be a player in the Beaufort, in the Arctic, so it's important for us to meet with them to get an understanding of how they are going to try to address the same-season relief well requirements," he told Reuters in a telephone interview.

After its review, Canada's National Energy Board reaffirmed a long-standing policy that requires drillers in the Far North offshore to demonstrate that they can drill a relief well during the same season of its initial well in case of a blowout.

The NEB said, however, that applicants wanting to depart from the rule would have to show how they would meet or exceed the policy's intended outcome, aimed at protecting the environment in the fragile region from contamination.

Ramsay said it is important for the territorial government to see what might be available as far as offering "equivalencies" to same-season relief wells.

He was shown BP's monitoring stations and a capping stack, a massive steel structure like the one the company used to finally cap the blown-out Macondo well that spewed nearly 5 million barrels of oil into the Gulf of Mexico for almost three months.

Last month BP agreed to pay $4.5 billion in penalties and plead guilty to criminal misconduct over the disaster, which caused the worst offshore oil spill in U.S. history.

As part of a deal announced in 2010, BP pooled its Canadian Beaufort acreage with that held by Exxon Mobil Corp and Imperial Oil Ltd. The aim was to avoid duplication of equipment and personnel.

The partners are currently assessing options for exploring and developing the acreage, but there are no current plans to start drilling, Imperial spokesman Pius Rolheiser said.

"We hope to someday have activity back in the Canadian Beaufort and be able to look at monitoring the in the Beaufort in the Northwest Territories," Ramsay said.

Chevron Corp has been conducting seismic studies in the region and expects to return in the summer of 2013, and a small British company, Franklin Petroleum, is also devising a seismic program for next season, he said.

In his speech on Wednesday, Ramsay said the Northwest Territories has an estimated 81 trillion cubic feet of natural gas and almost seven billion barrels of oil.

The trick has been developing the resources and getting them to market. The Imperial-led Mackenzie Valley Pipeline is stalled against a backdrop of weak natural gas prices and booming shale gas supplies closer to market.

The government is optimistic, however, about the Conol shale oil formation near Norman Wells in the central Mackenzie Valley, where companies such as Husky Energy Inc, Royal Dutch Shell Plc, ConocoPhillips and MGM Energy Corp have launched exploration programs to tap an estimated two billion to three billion barrels of crude.