Oil major ExxonMobil Corporation’s (XOM - Free Report) Canadian subsidiary, Imperial Oil Ltd. (IMO - Free Report) is at present considering the drilling of the deepest offshore well in the Arctic.
A project description of the same was submitted by Imperial Oil to Canadian regulators, seeking to go ahead with the proposed exploratory well. The well, projected to take two to four years for completion, could extend about 6 miles below the floor of the Beaufort Sea. If approved, it would be the most expensive well to be drilled.
Imperial Oil did not disclose the depth of the well, which could vary and will be revealed only after a formal application is made. However, the geological target is expected to be a maximum depth of about 4.7 miles. To deal with the technical complexities of these deep high pressure wells, which may be drilled over 6 miles, complex well casing, cementing and drilling plans are required.
The proposed well is likely to be drilled in the Canadian Arctic, about 110 miles off the coast of the Northwest Territories town of Tuktoyaktuk. The particular area is owned by Imperial, ExxonMobil and partner BP plc (BP - Free Report) .
Canada updated its Arctic drilling policy following the disastrous 2010 Deepwater Horizon blowout spill in the Gulf of Mexico. It laid down the need to have two rigs on site, including a backup competent of drilling a separate emergency relief well to stop the flow of oil in case of an accident.
However, Canada's main energy regulator, the National Energy Board (NEB), left a potential escape clause by permitting exceptions in cases where operators can "meet or exceed" a same-season relief well's ability to stop a spill. An average High Arctic drilling season lasts for around 120 days from around May to November.
Imperial Oil and its partners intend to drill an exploratory well in the summer of 2020, which would be the first offshore drilling in Canada's Arctic waters since 2005, subject to approvals.
As the company stated that it cannot meet a longstanding requirement to stop an accidental blowout within the short Arctic summer drilling season by drilling a so-called relief well, environmentalists have voiced their concern. The latter asked Canada's NEB last month to clarify whether it was ready to preemptively grant a policy exception in this case.
At present, ExxonMobil carries a Zacks Rank #3 (Hold). Another stock in the oil and gas sector worth considering is Encana Corporation (ECA - Free Report) , which sports a Zacks Rank #1 (Strong Buy).