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Dreaming of a breakthrough Province’s west coast has history of unfounded rumors, financial troubles; consortium of junior explorers adds to list of setbacks, but ready to try again Gary Park Petroleum News Calgary Correspondent
For decades there have been dreams of a big pay-off, but instead the history of western Newfoundland has been one of hopes raised, hopes dashed.
Not unlike the often frustrating search for oil in the Grand Banks region off Newfoundland’s east coast, which is now producing more than 300,000 barrels per day, the west coast has been a litany of failures and dampened expectations.
The latest stumble occurred earlier this month when a consortium of junior E&P companies led by Contact Exploration stopped drilling an onshore well at Parson’s Pond 460 feet short of the planned total depth of almost 4,000 feet.
Oil seepages from Parson’s Pond were first noticed almost 200 years ago and were used as a cure for rheumatism. An exploratory well was drilled in 1867.
But the latest serious attempt to commercialize the region has hit a wall with the decision to cement Contact’s C$1 million well and return the drill rig to its owners after the drill bit was unable to penetrate a fault zone and reach the main target.
Pat Laracy, president of Vulcan Minerals, one of the partners, said the feeling was more one of frustration than disappointment, given that the well is not yet a dry hole.
He said the only answer now is to return with a different drilling technique to break through the fault zone, once the results so far have been analyzed. Contact has estimated that the structure could hold 100 million barrels of recoverable oil. Vulcan moving ahead Undeterred, Vulcan is moving ahead with its own drilling application for southwest Newfoundland, with hopes of spudding a well this spring. But an earlier well in that region was abandoned three years ago by American Eagle Reserve Canada when it encountered drilling problems.
In 1995, there was a frenzy of speculation involving a secretive well by Hunt Oil and PanCanadian (which has since merged with Alberta Energy Co. to form EnCana). The well lit up the night sky with a flare after being drilled at a cost of C$10 million-$15 million to a depth of almost 15,000 feet, triggering talk of a 100 million barrel find. But by mid-1996 the two companies plugged and abandoned the well.
In 1999, Canadian Imperial Venture said it was poised to become the first company to produce oil in Newfoundland from a land-based well, after farming into the Hunt-PanCanadian acreage, then eventually taking over as operator after the other two exited the play. The junior said it was counting on 3,270 bpd of oil and 48 million cubic feet of gas, starting in 2000.
Canadian Imperial then announced in 2001 that it planned to spud the first of three onshore evaluation wells to support a project that could yield as much as 10,000 bpd of light crude and “significant volumes” of associated gas.
In May 2002, creditors of Canadian Imperial who were owed C$11.1 million gave the company a second chance to prove that its onshore properties held commercial oil reserves. That came just four months after Canadian Imperial admitted it was suffering from a “significant cash-flow deficiency” because of cost overruns at the venture on the Port au Port Peninsula.
But by late 2003, Canadian Imperial had filed for insolvency reorganization after failing to produce at least 10,000 barrels in any two consecutive months.
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