Nova Scotia sells offshore potential

Gary Park

For Petroleum News

The Nova Scotia government has spent C$15 million to estimate that the province’s offshore contains 120 trillion cubic feet of gas and 8 billion barrels of oil — three times earlier calculations — in an effort to entice some of the world’s largest oil and gas companies back to the region.

Energy Minister Charlie Parker said the “very large numbers” require more technical assessment, adding the estimates are “only potential.”

“More focused seismic work needs to be initiated and explorers need to drill and find success,” he said.

Parker said a number of industry and government associations “used sophisticated software models” to determine the extent and location of hydrocarbons and enable the province to “identify key hydrocarbon bearing fairways and petroleum play types.”

He said Nova Scotia’s offshore has logged 207 wells since 1967, compared with more than 15,000 in the Gulf of Mexico.

Parker said the preliminary findings were reviewed in January with an international peer review panel, which suggested some refinements that have since been implemented.

Call for bids later this year

“The environment is harsh and, in recent years, most of our exploration wells have come up dry,” he said.

“When we asked them, most oil and gas companies told us that the uncertainty around our offshore geology made investing in exploration too big a risk, especially with natural gas prices in decline,” Parker said.

He said the challenge now for his government is to provide the super-majors with a “level of detail they are accustomed to. We now believe we can credibly explain why recent exploration has been unsuccessful.

“In fact, we now see much more petroleum potential in our offshore than we had ever projected before.”

Parker said offshore energy royalties have dropped from 10 percent of government revenue a few years ago to 2 percent — “lower than we would like to see it.”

To date, the province has had only two producing offshore fields — the Conhassett-Panuke oil field which yielded 45 million barrels in the 1990s and the Sable gas project, whose production has been steadily declining.

However, Encana expects its Deep Panuke gas project will come on stream later this year and add 200 million to 300 million cubic feet per day to its portfolio.