Deepwater Orphan Basin a big-time oil prospect

Independent seismic rates reserves at 6-8 billion barrels, bigger than anything in North America except Alaska’s Prudhoe Bay field

Gary Park

Petroleum News Calgary correspondent

Speculative seismic could thrust Newfoundland’s deepwater Orphan Basin into the big leagues, if drilling is able to back up the results.

Geophysical Service Inc., which operates primarily out of Calgary and Houston, has rated the potential of the basin at 6 billion to 8 billion barrels — surpassing anything in North America except Prudhoe Bay.

GSI Chief Executive Officer Davey Einarsson told Petroleum News that the seismic points to oil-bearing sands that are three to four times the size of the nearby Jeanne d’Arc Basin, which is currently Newfoundland’s only producing area and is estimated to hold about 2 billion barrels of recoverable oil.

He described Orphan as “broader, bigger and less complex” than Jeanne d’Arc, where the Hibernia and Terra Nova fields are on stream and White Rose is targeted for start-up by early 2006.

The findings from three summers of seismic — 1,500 miles of 2-D and 200 square miles of 3-D in a 52,000-square-mile basin — lend weight to the startling pre-Christmas land sale, when Chevron Canada Resources (the 50 percent operator), Imperial Oil and ExxonMobil (each holding 25 percent) made C$673 million in successful work commitments for eight parcels.

Einarsson said Jeanne d’Arc is “much more faulted and complex,” while Orphan “is more uniform and bigger in the same geologic zone, so it’s got more potential.”

Water depths 6,600 to 10,000 feet

The region is notorious for icebergs and storms, but Einarsson said technological advances have reduced most of those dangers, with floating production storage and offloading vessels able to be moved from the path of any approaching icebergs.

He said “all of the majors” have participated in the seismic work, which GSI hopes to continue this year with two vessels — one owned and one leased, but he said the company has not been involved in negotiations with Chevron, Imperial or ExxonMobil.

However, Einarsson believes the bidders will likely start drilling in 2006.

A spokeswoman for Chevron told Petroleum News that more seismic work is likely to be conducted within two years before a decision is made on drilling.

However, she said Chevron views its record bids as an “exciting move into a new and unexplored basin,” and an element of the company’s focus on growth opportunities in the Mackenzie Delta, Alberta oil sands and Atlantic Canada.

Indications of potential “really spectacular”

He said more 3-D seismic is needed, followed by an evaluation to define geological targets, along with environmental assessments.

Roche doubted any drilling would be possible before 2005.

Seven exploration wells were drilled in the basin and northeast Newfoundland shelf over the decade to 1985, but none was drilled in the parcels sold last month.

The Newfoundland government, which included GSI’s seismic findings in a study of the basin, has said the region is similar to the Porcupine Basin off the west coast of Ireland, where the Irish government has been trying to reignite an exploration program.

Einarsson said he was very surprised that the Orphan parcels were cornered by all three bidders, but was critical of Newfoundland’s policy of allowing companies to carve out the blocks they want to bid on.

He said Newfoundland offers the “oil companies one heck of a deal,” while regulators in the Gulf of Mexico, North Sea and Norway establish their own grid pattern for lease sales.

Einarsson said Newfoundland is employing an “archaic system” that stems from its old mining leases and in the process is not ensuring the best returns for taxpayers.