Husky joins Statoil in leaning east

Symonds says opportunities in Atlantic region offshore could be better than prospects in Northwest Territories Canol oil shale

Gary Park

For Petroleum News

Husky Energy has echoed Statoil, its senior partner in offshore Newfoundland plays, in suggesting the East Coast is a better bet than Western Canadian prospects.

Norway’s Statoil indicated it is leaning more towards Newfoundland and away from the Alberta oil sands, while Rob Symonds, Husky’s senior vice president for Western Canada production, suggested opportunities in the Atlantic region are better than his company’s prospects in the Canol oil shale in the Northwest Territories.

A joint venture of the two companies is faced with increasing pressure since reporting three breakthrough discoveries in the Flemish Pass basin over the past four years, with the latest boosting overall estimates to about 540 million barrels.

Statoil and Husky are now trying to line up a rig for a delineation well at their Harpoon discovery for which they have yet to issue a recoverable resource estimate.

Although the Bay du Nord success lags behind the potential of the oil sands or even the Canol, the dilemma for the companies is based on soaring costs in Canada and worldwide and weighing the comparative costs of separating crude from oil sands bitumen and extracting oil from the remote NWT play, or securing deepwater rigs for Newfoundland.

Statoil is expected to decide between the two in March, while Husky, backed by growing offshore experience in the South China Sea, is faced with deciding whether to enlarge its core operations in North Atlantic waters.

Flemish Pass success

The company’s current output in the shallower waters of the Jeanne d’Arc basin is about 50,000 barrels per day from the White Rose project that it operates and its minority stake in Suncor Energy’s Terra Nova field.

Symonds said Husky does have “some exploration opportunities” in the White Rose field that could add to those volumes.

He told analysts the three discoveries, in which Husky has a 35 percent stake, “are themselves sufficient probably for a deepwater development,” with timing likely in the range of 2019-2021.

White Rose also offers a natural gas prospect, which the Canada-Newfoundland and Labrador Offshore Petroleum Board has rated at 3.02 trillion cubic feet, although the region has been unable even when gas prices were robust to figure out an economic way to get the gas to market.

The regulatory board has attached a figure of 12.19 tcf to discovered gas resources in the Newfoundland-Labrador region.

Symonds doubted that commercializing White Rose gas is likely to happen before 2020.

Husky evaluating Canol

The challenge for the Muskwa is to find an economic means of developing the Duvernay-equivalent rock, while the Canol shale faces its own difficulties, he said.

Symonds said the Bakken has 5 million barrels of oil in place for every 640 acres, while the Muskwa has 20 million barrels and the Canol shale could have 80 million-90 million barrels but is restricted to a three-month “working window in the winter.”

Even though an all-weather road has been built to open up the summer season, he said, “the real challenge for us is: What is the type curve? Can we afford to build the infrastructure ... to go to year-round activity?”

Husky and other Canol operators are exploring information sharing to avoid repeating mistakes, but Husky is holding back from drilling after two vertical wells established hydrocarbons in the region, Symonds said.

He said horizontal wells might be drilled in the 2015-2016 winter, “allowing us to make a long-term determination of deliverability. It’s the logistics of a long-term test that are holding us back.”

In weighing the rival prospects within the company, Husky views the chances of offshore Newfoundland development by 2020 as more attractive than Canol development, Symonds said.