Imperial Oil tackles Nova Scotia deepwater challenge off Canada’s East Coast

Gary Park, Petroleum News Calgary correspondent

Imperial Oil is diving in where others are hesitant to tread by announcing its first deepwater drilling program off Canada’s East Coast.

It has awarded a contract for drilling services to Ocean Rig Canada to use the semi-submersible drill vessel Eirik Raude to start drilling on the Scotian Slope as early as next month. Imperial, 69.6 percent owned by ExxonMobil, obtained 100 percent exploration rights to two parcels covering 618,000 acres in water depths ranging from 650 feet to almost 10,000 feet in return for work commitments of C$100 million.

Three-dimensional seismic was acquired in 2000 and 2001 and last year Imperial used advanced ExxonMobil technology to evaluate the acreage.

Imperial will be operator of the well and Talisman Energy will earn a 30 percent equity interest in two deepwater licenses by participating in the drilling of an exploration well on one of the blocks.

Imperial Senior Vice President K.C. Williams said in a statement that the offshore Nova Scotia deepwater play “contains a number of large, high-potential exploration lands, but remains unproven.”

Despite the geologic risks and high drilling costs, he said it is prudent to “test this significant opportunity now.”

Imperial also has a 9 percent working interest in the producing Sable natural gas project, a 20 percent interest in six shallow-water offshore parcels near Sable and a one-sixth interest in three additional parcels.

It is entering the Nova Scotia picture after a succession of drilling failures and postponed plans, although John Hogg, EnCana’s vice president for Atlantic Canada, said earlier this month that more than 10 deepwater wells will likely be drilled in the region in the next two years.

The Canada-Nova Scotia Offshore Petroleum Board remains confident that industry interest has not evaporated. It issued a call for bids June 5 for four parcels covering a total area of 620,000 acres, setting a deadline of Nov. 6.