Newfoundland eyes ‘giant’ offshore status

Seismic indicates 30 billion boe; government chases commitments, looks for ‘viable and sustainable’ industry; 11 parcels up for bid

GARY PARK

For Petroleum News

Inspired by results of a new seismic survey that revealed its offshore has 30 billion barrels equivalent of oil and natural gas, the Newfoundland government is chasing billion-dollar drilling commitments from international explorers.

Premier Paul Davis said the potential in 11 parcels contained in a bid package that closes Nov. 12 is “enormous” and could turn his province into a global energy giant.

“We will have a viable and sustainable oil and gas industry like we never imagined and it will (last) for generations to come,” he told a news conference.

The assessment was compiled by French geophysical firm Beicip-Franlab that estimated the block in the Flemish Pass could hold 12 billion barrels of crude and 113 trillion cubic feet of gas, based on seismic and satellite data collected by provincially owned Nalcor Energy and private sector partners that conducted a four-year, C$24 million exploration program.

Nalcor Chief Executive Officer Ed Martin said the seismic results “would indicate that there is a strong probability that you could have seven Hibernias in that one sector,” referring to offshore Newfoundland’s pioneering Hibernia project that was established 30 years ago.

“They’re big numbers and it’s pretty exciting,” he said, predicting that the offshore is “poised for greatness.”

Government controls data

Now that the provincial government controls the data, it plans to hold a series of auctions over the next several years.

Davis said the decision to embark on publicly funded surveys is proof that his government is no longer a “passive participant” in the industry, but he insisted there will be “no giveaways ... on that there will be no debate.”

Martin said that despite weak oil prices and global exploration cutbacks, the industry is showing a strong interest in buying Flemish Pass data.

“We place ourselves against the few remaining frontier areas that show significant potential, but are underexplored,” he said. “That’s what the supermajors are looking for and that includes Brazil, Mexico and ourselves.”

BG acquires stakes

BG said in September that it acquired stakes in three exploration areas from Spanish-based Repsol on rights about 120 miles east of St. John’s, Newfoundland, that are operated by Statoil.

“This provides the company with access to early stage exploration in a proven prospective basin ahead of the first well being drilled later this year,” BG said in a statement.

The stakes range from 10 percent to 25 percent and, when purchased, were in line with BG’s “strategic exploration focus to enter new basins.”

Nova Scotia is also observing renewed interest in its offshore, with BP completing a seismic program last year and partnering with Hess and Woodside Petroleum to work on four deepwater blocks.

Bob Cadigan, chief executive officer of the Newfoundland Offshore Industries Association, said the geosciences data is “groundbreaking,” putting the province in the same league as Norway.

But he cautioned that, even though Beicip-Franlab is a “world authority,” the actual resource numbers won’t be confirmed until wells are drilled.

Even so he is confident that companies will start redirecting exploration dollars to Newfoundland.

Paul Barnes, Atlantic Canada manager with the Canadian Association of Petroleum Producers, said the prospects may even entice companies that have no experience in the offshore.

Nalcor said that only about 160 wells have been drilled in the region and since production started in 1997 the Hibernia, Terra Nova and White Rose fields have pumped about 1.5 billion barrels.

The Hebron field is due to come on stream in 2017, tapping reserves of 700 million barrels, while the 2013 Bay du Nord deepwater discovery is thought to hold 300 million to 600 million barrels.