Chevron cancels Canadian drilling project
Chevron cancels Canadian drilling projectReuters

US oil giant Chevron Corp said it is indefinitely halting plans to drill oil in Arctic waters given the weak outlook for crude prices.

In a letter to Canada's National Energy Board, the company said it would put the drilling programme in the Beaufort Sea on hold indefinitely due to "the level of economic uncertainty in the industry."

The company has been planning the project since 2009, and had planned to drill the prospect in the 2020s, according to filings.

The drilling project in the EL 481 block is so far the largest to put on hold after oil prices dropped by more than 40% since June. The company's move also indicates that the slide in oil prices has started affecting big oil companies' production and exploration.

Due to the price drop, many oil companies are cutting their capital expenditures.

The Arctic holds billions of barrels of untapped oil reserves, but offshore drilling costs there are among the highest in the world due to its remote location and severe weather, according to The Wall Street Journal.

Chevron has two licenses to explore in the Beaufort, and previously projected big spending in its area of about 508,000 acres.

Meanwhile, Imperial Oil Ltd, which leads a Canadian joint venture with Exxon Mobil and BP Plc earlier said that it has not changed early-stage plans to drill in the Beaufort Sea, though a final decision is yet to be made.

US conglomerate General Electricals earlier said its 2015 profit is facing pressure, as oil firms are set to reduce capital expenditure due to the slide in oil prices. GE expects oil and gas revenue flat to down 5%, with profits flat to down 5%.

Brent crude for delivery in February is currently trading up 0.2% at $61.30 per barrel.