The East Coast of Canada will be a growing exporter of oil, natural gas, and electric power to US markets within the next few years, the premiers of Nova Scotia and of Newfoundland and Labrador provinces said May 1 at the Offshore Technology Conference in Houston.
Meanwhile, the first floating production, storage, and offloading (FPSO) vessel to operate in North American waters is scheduled to start production at Terra Nova field off Newfoundland this fall.
East Coast potential
"Nova Scotia will be a player in the North American energy strategy by producing approximately 1 bcfd of gas by the middle of this decade and possibly double that by the end of the decade," said Nova Scotia Premier John Hamm at a press conference.
"Technology is edging to the point where we could send electricity as well as gas to northeast markets," he said. "In the long run, new industries will locate closer to our environmentally friendly, reliable energy source."
The Grand Banks and Nova Scotia offshore areas have an estimated 5.3 billion bbl of conventional oil reserves and 63 tcf of gas reserves, Canadian officials reported.
"Offshore Atlantic Canada offers tremendous potential for new oil and gas discoveries and a wide variety of investment opportunities," said Roger Grimes, premier of Newfoundland and Labrador province.
The 127 exploration wells drilled off Newfound land and Labrador so far have produced 23 significant discoveries. Of those, 18 are located on the northern Grand Banks, with five off Labrador.
"The northern Grand Banks discoveries contain over 2 billion bbl of recoverable oil, 5 tcf of natural gas, and almost 300 million bbl of natural gas liquids. Discoveries offshore Labrador contain an additional 4 tcf of recoverable natural gas and over 100 million bbl of natural gas liquids," Grimes said.
Assessments of that offshore area indicate more than 6 billion bbl of oil still to be discovered and more than 50 tcf of recoverable gas, he said.
About 7 tcf of gas has been found off Nova Scotia. "But with more than $1 billion in exploration now set for the next 41/2 years, that number is sure to grow," Hamm said.
Estimates of Nova Scotia's offshore potential range are 40-100 tcf. Looking at the whole of Canada's east coast, Hamm said, "It doesn't take much to get to an outside number of 160 tcf."
Moreover, he said, "We have a very important edge over other [Alaskan and Canadian] frontiers-proximity to markets, something the northern developers would dearly love to have."
The Maritimes Northeast Pipeline infrastructure is already in place, with New England and eastern Canadian markets only some hundreds of miles away.
"Plans to add compression and looping for this pipe to accommodate recent and future discoveries are already being drawn up," said Hamm. "And several major industry players are starting to examine the feasibility of a subsea route from the offshore to Nova Scotia to New England and New York. They are working on pipeline models that are at least as large as the Maritimes Northeast line to carry gas that has yet to be discovered."
Grimes said, "There are a number of transportation options available that can move our offshore gas resources to US markets, including transportation by ships containing compressed natural gas or LNG and, of course, via pipeline. Each of these options is commercially viable under the right market conditions."
Studies demonstrate "that our discovered gas resource base in the Grand Banks can support plateau gas production of about 700 MMcfd for about 15 years," he said. "I believe that by governments, industry, and businesses working together, we can get our offshore gas to market by or before 2010 via the pipeline option."
One of the most promising areas off Canada's east coast is the Laurentian subbasin, scene of a longstanding boundary dispute between the two provinces. That dispute was submitted to an arbitration tribunal in March and could be resolved this month, the two premiers said.
During the press conference, Grimes announced that nearly 5 million acres in 14 separate parcels off Newfoundland are being offered for bids through Nov. 20.
Parcels 1-3 are located in the Flemish Pass basin, where "over the last couple of years we have seen exceptionally high bids for parcelsellipseby Petro-Canada and Norsk Hydro [AS]," said Grimes. "Indeed, Petro-Canada has indicated that it has identified five targets on their acreage that could contain giant fields, each with a possible recoverable oil resource of about 500 million bbl. These companies are expected to begin drilling in this area next year."
Parcels 4-7 are in the northern part of the Jeanne d'Arc basin, where the majority of the province's oil and gas has been discovered so far.
Parcels 8-10 are in the South Whale basin. "Husky Energy was an aggressive player in last year's land sale and was a successful bidder for two blocks in this area," Grimes said. "Husky has identified one feature in the South Whale basin that could contain about 2.5 tcf of recoverable natural gas. A number of other prospects also have been identified in the area."
Parcels 11-14 are on Newfoundland's west side in an area where there have been numerous oil shows in onshore exploration and water wells, said Grimes.
Terra Nova FPSO
Terra Nova, in the Jeanne d'Arc basin 325 km southeast of St. John's, Newf., is one of 15 "significant" oil discoveries in the basin, the largest of which is Hibernia-in production since 1997.
"Hibernia and Terra Nova are the largest conventional oil pools found in Canada since the 1960s," said Gary Bruce, vice-president, offshore development and operations for Terra Nova operator Petro-Canada. Bruce described the Terra Nova project Apr. 30 at OTC.
He said that four fields dominate the basin. Hibernia has reserves of more than 700 million bbl, Terra Nova 400 million bbl, White Rose 200-250 million bbl, and Hebron-Ben Nevis, 600-700 million bbl-half of which is heavy oil at about 22° gravity.
"We have some interesting challenges," Bruce said.
When the four fields come on stream and the smaller fields are tied into them, the basin could produce 300,000 b/d over the next 25 years.
"The [Terra Nova] FPSO contains all topside oil production and processing equipment, as well as storage capacity for 960,000 bbl of oil," Bruce said.
"While there are nearly 70 FPSOs in service or under development in the world, the Terra Nova FPSO will be the first of its kind developed for the unique environmental conditions offshore Newfoundland," he said.
The vessel has an exceptionally tough double hull and 3,000 tonnes of extra ice-strengthening steel to withstand contact with sea ice (mid-February-April) and icebergs (February-July), including any "unacceptable" iceberg of 100,000 tonnes.
As many as 600 icebergs break off the coast of Greenland each year and float southward on the Labrador current toward the Grand Banks, according to R. B. Dugal of Petro-Canada Oil & Gas.
He spoke at a separate OTC technical session on ice detection and management in Terra Nova. Workboats successfully deflect about 97% of the icebergs. Despite the intensive ice detection and management effort, in April 2000 there were 10 icebergs near the production areas, one within a half mile of Hibernia wells and one within a quarter mile of the Terra Nova wellheads.
Because iceberg scour is such a threat to facilities in this environment, all flowlines are buried in the seabed for protection, insulation, and stability, and wellheads in Terra Nova field are 10-12 ft lower than the seabed in "glory holes" dredged by trailer suction. The holes are 210 ft long by 80 ft wide by 30 ft deep.
Bruce said the Terra Nova FPSO is designed to stay anchored during a 100-year storm with 90-ft waves, withstand the impact of a 100,000-tonne iceberg, and, in less than 20 minutes, get out of the way of icebergs of about 2 million tonnes.
The FPSO is 958 ft long, 149 ft in breadth, and has a draft of 92 ft. Its operating draft is 42-61 ft. Maximum displacement at operating draught is 194,000 tonnes.
It reportedly has the largest disconnectable turret ever built, weighing 3,000 tonnes, standing 210 ft high, and having 19 risers attached. The turret is connected to a spider buoy, which has risers and anchor chains attached. When the FPSO moves off location, the spider buoy is released, using automated controls. It then floats some 130 ft below sea level until the FPSO returns to hook onto it and pull it into the turret for rejoining.
Petro-Canada operates Terra Nova on behalf of its partners ExxonMobil Corp., Husky Oil Operations Ltd., Norsk Hydro Canada Oil & Gas Inc., Murphy Oil Co. Ltd., Mosbacher Operating Ltd., and Chevron Corp. affiliate Chevron Canada Resources.
The FPSO is at Bull Arm, Newf., in the latter stages of hookup and commissioning. It has been docked there since May 2000, when it arrived from the Daewoo Corp. shipyard in South Korea where it was built. The project schedule calls for first oil by yearend.
Delays have increased costs by 35% since the project was sanctioned. Operating costs in Hibernia, however, are falling and are now at less than $1.50/bbl. "We expect a similar cost at Terra Nova during peak production years," Bruce said.
First phase of Terra Nova production calls for 24 wells-14 producers, 7 water injectors, and 3 gas injectors.
Meanwhile, the semisubmersible Henry Goodrich already has drilled the six wells needed for start-up.
The Newfoundland offshore area is vast-225,000 sq miles-and Petro-Canada believes that the Flemish Pass basin, in more than 3,000 ft of water, may contain the next large oil field. Partners Norsk Hydro, ExxonMobil, and Chevron contracted a 1,500-sq mile 3D seismic program last year and are evaluating results.
Although a pipeline to produce Offshore Newfoundland gas is not currently economically feasible and faces the technological challenge of iceberg conditions, the government is assessing potential routes for a $2.5 billion (Can.), 36-in., 1 bcfd line.