May 20, 2010 / 7:11 PM / in 8 years

UPDATE 2-Canada toughens Chevron drill rules after BP spill

* Chevron must test blowout preventer, other equipment

* Audits and drill ship inspections to be more frequent

* Must get clearance before reaching target at Nfld well (Adds detail and comment)

By Scott Haggett

CALGARY, Alberta, May 20 (Reuters) - A Canadian regulator tightened offshore drilling rules on Thursday in response to the massive oil spill in the Gulf of Mexico, forcing new restrictions on Chevron Corp’s (CVX.N) operations off Newfoundland.

Chevron will have to provide test results for the blowout preventer and its activation systems at the Lona O-55 exploratory well off the eastern Canadian province, the regulator said. It was the blowout preventer for the BP Plc (BP.L) well in the Gulf that failed, leading to the spill.

The Canada-Newfoundland and Labrador Offshore Petroleum Board said it was making the new requirements in light of the situation unfolding in the Gulf of Mexico and heightened public concern over drilling operations currently under way off the province of Newfoundland and Labrador.

Along with other measures, Chevron’s drill ship will face more frequent audits and inspections and regulators will ensure that safety systems are functioning before the drilling reaches its planned target.

Chevron said it will comply with the new regulations for the well, being drilled in water 2,600 meters deep in the Orphan Basin, about 430 kilometers (267 miles) northeast of St. John‘s, Newfoundland.

“We are cooperating fully ... and will facilitate the board’s planned oversight measures for Orphan Basin drilling operations,” Leif Sollid, a spokesman for Chevron, said. “The focus of everyone involved is to ensure safe and incident free operations.”

    The BP well is under 1,500 meters of water 68 kilometers (42 miles) offshore.

    Canadian governments and regulators are reassessing the country’s preparedness for an offshore disaster following the April 20 explosion of Transocean Ltd’s (RIG.N) Deepwater Horizon drilling rig.

    The explosion killed 11 workers and triggered what could prove to be the worst U.S. oil spill if the crude keeps spewing unchecked into the Gulf.

    The Chevron well is the only offshore drilling currently underway in Canadian waters. However both BP and Exxon Mobil Corp (XOM.N) have longer term plans to explore for petroleum in the Beaufort Sea, north of the Arctic Circle.

    The National Energy Board, Canada’s federal oil and gas regulator, launched a review of Arctic safety and environmental drilling requirements last week, canceling planned hearings on a request from BP and Exxon reexamine a requirement that Arctic drillers would need to drill a relief well in the same season an exploratory well was completed. (Editing by Janet Guttsman; Editing by Frank McGurty)

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