CALGARY, Alberta Chevron Corp (CVX.N) is putting a plan to drill for oil in the Beaufort Sea in Canada's Arctic on hold indefinitely because of what it called "economic uncertainty in the industry" as oil prices fall.
In a letter to Canada's National Energy Board on Wednesday, the company withdrew from a hearing on Arctic drilling rules because it has walked away from plans to drill in the EL 481 block, 250 kilometers (155 miles) northwest of Tuktoyaktuk, Northwest Territories.
The drilling project is the largest yet put on hold after oil prices dropped by nearly half over the last six months, even as a long list of oil companies cut their budgets for 2015 because of the price drop.
"Chevron has put its drilling plans for EL 481 on hold indefinitely," the company said in its letter to the regulator, which was confirmed by a spokesman.
The San Ramon, California-based company has been planning the well since 2009 and had planned to drill the prospect in the 2020s, according to filings.
Imperial Oil Ltd (IMO.TO), which leads a joint venture with Exxon Mobil Corp (XOM.N) and BP Plc (BP.L), said on Wednesday that it has not changed early-stage plans to drill in the Beaufort Sea and that a final decision on the project has yet to made.
Chevron has two licenses to explore in the Beaufort, holding EL 481 outright and controlling 60 percent in the other alongside Norway’s Statoil ASA (STL.OL).
The company had previously outlined expectations to have “highly significant” capital outlays in the area. Chevron paid C$103.3 million for the rights to explore in the area of roughly 508,000 acres (206,000 hectares). The region is just east of the Canada-U.S. border.
(Reporting by Scott Haggett and Nia Williams in Calgary and Ernest Scheyder in Williston; Editing by Cynthia Osterman and Steve Orlofsky)