Arctic Drilling Moratorium Includes No Extension of Existing Permits

Canada’s moratorium on new licences to drill for oil and gas in the Arctic, announced jointly with U.S. President Barack Obama December 20, will also apply to extensions of several existing drilling licences, Bloomberg notes, citing an online background document.

Last month, the news agency reported that “in an announcement coordinated between two of the world’s biggest oil producers, Canadian Prime Minister Justin Trudeau committed to freeze new offshore leasing in his nation’s Arctic waters and review the matter every five years.”

According to the Canadian Association of Petroleum Producers’ Arctic issue manager Paul Barnes, quoted separately by Bloomberg, the industry’s “understanding” at the time was that existing licence-holders would get a year of consultation with Ottawa about their future in the region. In the background document, however, “Trudeau’s government specifically ruled out lease extensions sought by industry before the new restrictions were put in place,” Bloomberg now reports.

Five companies hold exploration licenses for parcels of the Beaufort Sea that run out between 2019 and 2023. They include BP, ExxonMobil subsidiary Imperial Oil Resources Ventures, ConocoPhillips Co., Chevron Canada Ltd., and Franklin Petroleum Canada Ltd. “Two other exploration licenses issued in the 1980s to Talisman Energy Inc., acquired by Repsol SA in 2015, and BP, have no expiry dates,” the outlet reports. None are actively working their Beaufort acreage.

Exxon paid the most for its licence: $1.8 billion in work commitments. If work is not initiated within the terms of the exploratory licences, Bloomberg says, Ottawa can demand that the companies pay it the value of the work bid but not done—although such a move would likely end up in court.

“Indigenous and Northern Affairs Minister Carolyn Bennett, who oversees Arctic oil regulation, has declined interview requests since the announcement,” the news agency notes. A spokesperson referred questions about extensions to her department, but “when asked specifically, the department didn’t directly address its online statement—saying instead companies are free to keep asking for them.”