Atlantic Canada's future

May 13, 2002
Basins off eastern Canada will experience increasing exploration and development drilling in coming years.

Basins off eastern Canada will experience increasing exploration and development drilling in coming years.

Newfoundland will produce more than a third of Canada's conventional light crude oil within 5 years, said Roger Grimes, premier of Newfoundland and Labrador.

Nova Scotia Premier John F. Hamm said his province anticipates the drilling of at least another 17 deepwater wells in the next 4 years at a cost of $1.2 billion and a minimum of nine shallow-water wells during the next year or 2 at a cost of $300 million (OGJ, Jan 21, 2002, p. 54).

A half dozen exploration wells have been drilled off Nova Scotia since 2000 at a cost of $300 million, and three wildcats planned in 2002 represent a $250 million investment, Hamm said.

The two provincial leaders made the comments during a press conference at the Offshore Technology Conference last week (see related coverage).

Production progress

Grimes noted that Hibernia field production averages more than 160,000 b/d of oil.

The field, 220 miles southeast of St. John's, Newf., started up on Nov. 17, 1997. Cumulative production is 183 million bbl, and original reserves are 884 million bbl.

Terra Nova field, 22 miles southeast of Hibernia, produced first oil on Jan. 20 and achieved its 125,000 b/d capacity in 9 days from start-up. Terra Nova has 370-470 million bbl of proved and probable reserves.

Operators announced the go-ahead for White Rose field development on Mar. 26. Start-up is pegged for fourth quarter 2005, with reserves estimated at 200-250 million bbl, the smallest development yet in the region.

Grimes said, "We are hopeful that this will encourage new investment and confidence in our offshore area by confirming that smaller projects can be developed economically."

The fourth project, Hebron-Ben Nevis, is on hold since February due to complex geology and oil characteristics.

"All of our fields have faced significant challenges, but they have been overcome," Grimes noted.

Nova Scotia's Hamm noted that gas has been flowing from the first wells off Sable Island since Dec. 31, 1999, and production has averaged 530 MMcfd this year. Three fields are on line, and ExxonMobil Corp. and partners now put Sable reserves at 2.6 tcf of gas. A fourth field is to go on line in 2003.

Exploration targets

Hamm said Nova Scotia has 59 active exploration licenses that carry a base $6 billion in spending commitments. Actual outlays should exceed that.

Twenty-six of the licenses qualify as deepwater blocks.

Marathon Oil Corp. started the deepwater drilling at Annapolis, where it had a gas kick. It moved the rig 500 m and spudded again. Chevron Corp. and EnCana Corp. groups will begin drilling in the region shortly.

EnCana and Kerr-McGee Corp. each holds a license in the Nova Scotia part of the Laurentian subbasin, where drilling should start in 2004. Kerr-McGee, Shell, and ExxonMobil likely will drill in 2003 generally southwest of Sable Island. A Canadian Superior Energy Inc.-El Paso Corp. partnership is to begin drilling by late June 2002.

"Many other prospects remain in our 33 shallow-water blocks," Hamm said. "Much of this land was licensed a few years ago, and commitments are coming due."

Grimes pointed to new exploration opportunities created by the resolution earlier this year of an offshore boundary dispute with Nova Scotia. This involves parts of the Laurentian subbasin, where Geological Survey of Canada has estimated the resource at 8-9 tcf of gas and 700-800 million bbl of oil.

"The first stage of this process will involve the conversion of old federal government permits into current exploration licenses. These permits, issued in the 1960s and 1970s, are currently held by ExxonMobil, Conoco [Canada Ltd.], and Imperial [Oil Ltd.]. This conversion process will commence shortly," Grimes said.

On the horizon

With exploration having matured in the Jeanne d'Arc basin, companies are eyeing deeper-water prospects and expanding into new areas such as the Flemish Pass basin, South Whale basin, and Laurentian subbasin.

"Companies such as Petro-Canada and newly merged EnCana have given indications that they will begin deepwater drilling programs later this year or early next year," Grimes said. "This new expansion will likely commence with deepwater exploration activities in the northern and southern Flemish Pass basin, where the companies have identified a number of large prospects." Flemish Pass is east-northeast of Jeanne d'Arc.

Also, compressed natural gas technology could present a development opportunity for 4.2 tcf of gas discovered on the shelf east of Labrador in the 1970s-80s, Grimes said.