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Offshore comes up dry again ExxonMobil partnership fails to generate commercial volumes in shallow-water well near Sable field; Marathon’s Crimson well carries hopes for rest of 2004 Gary Park Petroleum News Calgary Correspondent
Offshore Nova Scotia hasn’t sunk yet, but it is taking on water at a rapid rate.
The region’s dreams of joining the big leagues of offshore basins were jolted again with word from ExxonMobil Canada on Aug. 12 that it had plugged and abandoned its Cree I-34 well in shallow waters after encountering “non-commercial quantities of hydrocarbons.”
ExxonMobil is operator with a 30 percent interest and sister company Imperial Oil held another 30 percent, leaving Shell Canada with 40 percent.
The well was abandoned at 12,940 feet, just short of the projected depth of 12,995 feet. Costs were not disclosed although wells in Nova Scotia waters generally run from C$30 million to C$100 million in deeper waters.
Cree had the potential to be tied in to the producing Sable project 25 miles to the northeast to sustain volumes in Nova Scotia’s only commercial field.
Cree’s disappointment comes on the heels of two other unsuccessful wells this year: Weymouth A-45, with EnCana as operator, which cost about C$100 million, and Mariner I-85, which was plugged in March by Canadian Superior Energy at a cost of about US$35 million.
Those setbacks were part of a six-year run of drilling duds, with 13 of 16 wells abandoned and the other three suspended, indicating discoveries that are still short of being economically viable. Crimson F-81 being drilled All that is left now is Crimson F-81 being drilled by Marathon Oil. At last report by the Canada-Nova Scotia Offshore Petroleum Board, the well was at 19,244 feet, closing in on its targeted depth of 21,400 feet.
Harvey Doer, president of Murphy Oil, a partner in the C$80 million Crimson well, said a result in expected within weeks.
The well has been described as Nova Scotia’s last immediate hope for a discovery large enough to support a stand-alone commercial project and build on Sable that has been hit by reserve write downs.
Marathon, as operator, is counting on Crimson to deliver a find that would bolster its 2002 Annapolis discovery that was suspended after encountering 100 feet of net gas pay over several zones, less than what had been hoped for.
The partners decided to tackle Crimson rather than drill more wells to evaluate Annapolis.Doer said a “good sized accumulation” is needed in such water depths to justify a project. Two others have drilling plans Meanwhile, only two other candidates are moving ahead with drilling plans for Nova Scotia, following a decision in June by companies to surrender 13 exploration blocks with C$275 million in work commitments and leave another 12 hanging in the balance, facing a verdict by Dec. 31.
Ever-optimistic, Canadian Superior says it is preparing for another well on the Mariner block.
The billionaire Texas-based Bass family, through BEPCo Canada, has applied to drill three exploration wells in the 2005-2007 period on a 100 percent owned exploration license. Depending on results, an additional three appraisal wells could be drilled within four to five years, based on a project description filed with the offshore board.
BEPCo plans to drill all wells in water depths greater than 4,000 feet, with the first scheduled for 9,700 feet in about 4,750 feet of water.
Because of its limited experience in deepwater drilling, BEPCo plans to contract the well drilling design and operational support activities.
The offshore board said it will consider an environmental assessment submitted by BEPCo, written public comments and expert opinion as it prepares a comprehensive study report for submission to Canada’s Environment Minister Stephane Dion.
For all of the setbacks, the board is sticking with its 2002 estimates that deepwater areas could hold up to 15 trillion cubic feet of gas and 2 billion barrels of oil.
A spokeswoman told the Halifax Daily News that “there is no reason to change,” based on drilling information produced in the last two years.
But the Atlantic Provinces Economic Council said in July that a “major” new discovery was needed soon to revive momentum in the offshore and to sustain investment activity in the second half of this decade.
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