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Tale of two provinces Nova Scotia flounders with only three wells in store for 2005; neighboring Newfoundland gears up for third commercial field within 12 months and seismic in two unexplored basins Gary Park Petroleum News Calgary Correspondent
Other than one exploratory well by EnCana and two wells by junior E&P firms — and none of them are confirmed — offshore Nova Scotia has little to pin its hopes on for 2005, but the neighboring waters of Newfoundland are churning with renewed optimism.
The developments will get close attention in the U.S. Northeast which counts on Atlantic Canada for a valuable share of its oil and gas needs.
Over the last five years, Nova Scotia has logged 19 exploration (eight of them in the last two years) and 14 development wells, while Newfoundland has recorded five exploration and 67 development wells.
But Nova Scotia’s six-year run of dry holes and loss of 19 exploration licenses in 2004 has put the region in the doldrums.
EnCana, with Calgary-based start-up Marauder Resources East Coast as a 35 percent partner, has made a C$250,000 drilling deposit to extend one of its deepwater licenses by another year, hinting that it may spud the C$25 million Grand Pre well this year.
Eternally upbeat Canadian Superior Energy and BEPCo Canada, backed by Texas oilman Perry bass and his four sons, have both targeted wells in 2005.
Canadian Superior has awarded a contract to GlobalSantaFe to return to its Mariner prospect as early as May.
BEPCo has a green light from regulators to drill this year and has declared its intentions to drill as many as three deepwater wells over the next three years. ExxonMobil to focus exclusively on Sable Offsetting those positives, ExxonMobil, which walked away from a bundle of licenses in 2004, has no plans to revive its Nova Scotia exploration activity.
Kevin Hawco, an East Coast manager for the company, told a Halifax conference Feb. 3 the global giant’s focus will remain exclusively on its 50.8 percent operator stake in the Sable gas field.
Although the projected Sable lifespan has been shorted from about 2025 to 2015, the consortium is spending C$700 million on new compression equipment to boost output from 400 million to 450 million cubic feet per day by mid-2006 to sustain the export volumes to the U.S. Northeast. Newfoundland making gains While Nova Scotia has been floundering, Newfoundland has quietly made solid gains, helped by about C$2.8 billion in spending over the last two years and a clutch of other successes.
Despite a December spill of “oily water” involving about 1,000 barrels at the Terra Nova field that project has just paid off its C$2 billion in capital costs, only 30 months after starting operations.
Terra Nova is operated by Petro-Canada at 33.99 percent. Partners are ExxonMobil 22 percent, Norsk Hydro Canada 15 percent, Husky Energy 12.51 percent, Murphy Oil 12 percent, Mosbacher Operating 3.5 percent and Chevron Canada 1 percent.
The C$2.35 billion White Rose project, owned 72.5 percent by Husky Energy and 27.5 percent by Petro-Canada, is on budget and on schedule to become Newfoundland’s third commercial oil field within 12 months, pushing combined output from the Jeanne d’Arc Basin to almost 450,000 bpd.
Other positive developments include a 50 percent increase over the past year in reserves for the Hibernia field, which started production in 1997, and planned seismic programs in two largely-unexplored basins.
Petro-Canada, a 34 percent partner in Hibernia, which produced an average 204,000 bpd in 2004, said development drilling has added a gross 105 million barrels to reserves on top of 220 million barrels earlier in 2004, raising the total to 940 million barrels. Ben Nevis/Avalon next phase The next phase of development focuses on Ben Nevis/Avalon, the second of Hibernia’s two reservoirs, which could add five years to Hibernia’s projected 25-year operating life.
Although “significantly” more faulted than the main Hibernia reservoir, Ben Nevis/Avalon is a maximum of 9,800 feet below the ocean floor, 1,000 feet shallower than Hibernia’s minimum depth, and has an estimated 700 million barrels of original oil in place.
The Canada-Newfoundland Offshore Petroleum Board said the “single biggest unknown factor in determining the life of the Hibernia field is the extent of the ultimate recovery from the Ben Nevis/Avalon reservoir.”
Also in the Jeanne d’Arc, Husky plans to spend C$20 million this year on an exploratory well in the South Whale Basin, where it anticipates reserves of up to 300 million barrels.
Even greater hopes are attached to seismic work scheduled for this year in the Orphan Basin, where three companies made C$673 million in work commitments in 2003, and the Laurentian sub-basin.
Subject to approval from its partners, ExxonMobil and Imperial, 50 percent operator Chevron Canada Resources is working on the details of gathering 6,000-8,000 square kilometers of three-dimensional seismic in the Orphan Basin, 120 miles northeast of Hibernia.
It aims to start gathering seismic in the May-September period, in what a Chevron spokesman said is a “very promising unexplored area,” where preliminary two-dimensional studies by seismic survey company Geophysical Service have indicated up to 8 billion barrels of oil.
On the Laurentian sub-basin, which is 82.4 percent in Newfoundland waters and 17.6 percent in Nova Scotia, ConocoPhillips Canada intends to collect about 6,100 kilometers of 2-D seismic data this year to test projections of ultimate natural gas reserves of 6 trillion cubic feet.
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