Chevron Canada Spuds Deepest Oil Well

MONTREAL (Dow Jones Newswires), May 11, 2010

Chevron Canada has begun drilling the country's deepest offshore oil well, as the firm sought to soothe fears over a repeat of the massive oil slick in the Gulf of Mexico.

The exploratory well in the North Atlantic, a prospect known as Lona 0-55, is set to establish a new record in Canada with water depth at 2,600 meters, Chevron said. The Stena Carron drill ship is sinking the well.

That's one kilometer deeper than the well that was being drilled by the Deepwater Horizon rig before it ruptured, gushing an estimated
210,000 gallons of crude into the Gulf of Mexico each day.

Eager to avert the kind of public relations disaster that has embroiled rival energy giant BP Plc (BP) over the U.S. oil slick, Chevron was careful to stress that for its new Canada drilling, "the primary focus of the experienced team managing drilling operations is on ensuring safe and incident-free operations during drilling."

The exploratory well, expected to be drilled and evaluated over several months, is located in the largely unexplored Orphan Basin, an
area stretching across 100,000 sq km. It is about 430 km northeast of Newfoundland's capital St. John's.

Local officials have also gone at lengths to reassure locals.

"We are confident...We're satisfied at this point in time that it is safe and prudent to continue with drilling in the Orphan Basin,"
Newfoundland and Labrador Natural Resources Minister Kathy Dunderdale told CBC News.

"If there are other steps that we can take that will give us assurance, and give the people of the province assurance about the
activity on our offshore, then we are going to do that."

Newfoundland's premier, Danny Williams, vowed last week to recruit an independent expert to review the drilling plans.

According to CBC, Chevron Canada has two drill ships under contract that could drill relief wells for the Lona 0-55 prospect, which could slow any spill by relieving pressure should the well suffer a blowout.

Chevron Canada has a 50% stake in the venture. Other participants include Shell Canada Energy, ExxonMobil Canada Ltd. and Imperial Oil Resources Ventures Limited. 

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