In a letter to Canada's National Energy Board late yesterday, 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 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.
WTI and Brent have slumped about 45 percent from this year’s peaks in June as a surge in shale drilling lifted U.S. output to the fastest pace in three decades amid slowing growth in world demand.
WTI for January delivery fell 4.2 percent to settle at $54.11 a barrel on the New York Mercantile Exchange today, the lowest settlement level since May 2009. Brent for February settlement declined 3.1 percent to $59.27 a barrel on the London-based ICE Futures Europe exchange.
The San Ramon, California-based company had previously said it could drill a well around 2020, assuming it got the necessary approvals.
There has been little offshore drilling in the Beaufort in the past 25 years, and before that, most activity took place close to shore.
For its part, Imperial Oil (TSE:IMO) said it remains committed to seeking regulatory approval for its Beaufort plans with joint venture partners Exxon Mobil (NYSE:XOM) and BP (NYSE:BP). Their blocks are about 175 kilometres northwest of Tuktoyaktuk.