Newfoundland basins revving up

Despite threats by premier to squeeze a larger share of royalties out of new projects, industry is pushing ahead with exploration

Gary Park

Petroleum News Canadian Correspondent

A hot summer is in store for two emerging basins in Newfoundland’s offshore, as the operators collect seismic data in advance of exploration wells planned for early 2007.

Regardless of threats by Premier Danny Williams to squeeze a larger share of royalties out of new projects, the industry is pushing ahead with plans for the Orphan and Laurentian basins, which are the province’s great hope of extending its reach beyond the Jeanne d’Arc Basin, where three fields will be pumping oil by the end of 2005.

Even the Jeanne d’Arc and the nearby South Whale Basin is about to shake off a dormant period.

Husky Energy plans to spud three wells later this summer in those two basins and is looking for a rig to drill up to four more wells, starting as early as June 2006, making it the most active explorer in the region.

The Orphan and Laurentian prospects are quickly moving into focus, planning their second summer of seismic surveys and, in Orphan’s case, making the first move to contract a rig.

ExxonMobil and Norway’s drilling contractor Ocean Rig said June 14 that they have signed a letter of intent for a rig to drill in either early 2006 or 2007.

If a final contract is signed, the semi-submersible deepwater rig Eirik Raude will make its way from offshore Norway, where it is under contract until late this year.

Partners in Orphan are Chevron Canada 50 percent, Shell Canada (which took a 20 percent working interest in March) and sister companies ExxonMobil and Imperial oil, each 10 percent.

The original three rocked the industry in late 2003 when they pledged to spend C$673 million to explore eight parcels in the 5.25-million acre basin.

Since then they have been gathering 3-D seismic, which have apparently reinforced estimates that Orphan may contain four pools, each one larger than the initial 884 million barrels in the Hibernia field.

But the key to unlocking “very high potential and high promise” is early success, said Paul Barnes, Atlantic Canada manager of the Canadian Association of Petroleum Producers.

The only exploration well in the basin was drilled in 1979 by Texaco, which set a world record at the time for water depth of almost 4,900 feet. Now operators are looking at depths of 8,200 feet.

ConocoPhillips Canada has indicated drilling is possible in the Laurentian in 2007. Reserve estimates are 600-700 million barrels of oil and 9 trillion cubic feet of gas.

Other action is taking place by partners of the Hebron-Ben Nevis project. Chevron Canada, ExxonMobil, Petro-Canada and Norsk Hydro Canada Oil & Gas will spend the next year evaluating which production system would be best suited to the 400-700 million barrel field.