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Chevron puts Canadian Arctic drilling on hold due to tumbling crude prices

Chevron puts Canadian Arctic drilling on hold due to tumbling crude prices

Chevron (NYSE:CVX), a U.S. oil group, said it put its Arctic drilling plan 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 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. 

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.

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. 

Shares of Chevron (NYSE:CVX) gained 2.1 percent to $108.25 at 3:28 p.m. in New York. The stock has lost 13 percent so far this year.

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Chevron Corporation Timeline

November 01 2013
August 28 2013

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