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With Mounting International Competition for Investment Dollars No time like the present? With mounting international competition for investment dollars and growing concerns about fossil fuels, the next 10 years just might mark the height of Newfoundland and Labrador’s offshore boom BY QUENTIN CASEY Overview of the turret on Terra Nova FPSO (Photo: Suncor) ONLINE EXTRAS: naturalresourcesmagazine.com NR13 ajor oil and gas companies are currently pursuing billions of dollars’ worth of exploratory work in Newfoundland and Labrador’s offshore, part of a The Hibernia oil field—located approximately Mhunt that could lead to multiple new oil projects. The indus- 315 km east-southeast of St. John’s, try’s offshore pursuit could unlock millions of barrels of oil Newfoundland—uses a fixed structure with three compartments: topsides, Gravity while providing the province with much-needed royalty Based Structure (GBS) and an offshore revenue. loading system. (Photo: Suncor) But the industry’s rosy optimism is also clouded by serious issues that could hinder promised exploration and potential new development, including industry complaints about regulatory delays, geographic challenges, concerns from the fishing industry and, most notably, climate change and calls to abandon the very barrels the industry hopes to bring to the surface. There’s a lot at stake. And timing is critical, with an existential question looming over the entire effort: is this Newfoundland and Labrador’s last and best shot at gener- ating oil riches? Or is it—despite an “an unprecedented level of interest” from global energy companies and billions of dollars in pledged spending—already too late? NO TIME LIKE THE PRESENT? geologic certainty that there’s going Expensive to be other major projects discov- ered,” he says. “I guess the question promises… is when and where.” Simply put, Newfoundland and Labrador’s offshore oil and gas sector is expecting significant activity over the next decade. Since 2014, energy companies have committed to spend Current more than $4 billion on offshore work, which represents roughly production… 60 per cent of the total spent in The province currently has four the history of Newfoundland and producing offshore oil projects— “I think it’s almost a Labrador’s offshore industry, dating Hebron, Hibernia, Terra Nova geologic certainty that back to the mid-1980s. and White Rose—which collec- “That’s pretty significant,” says tively boast average production of there’s going to be Jim Keating, executive vice president 340,000 barrels per day, down from other major projects of offshore development at Nalcor 2007’s peak monthly production of discovered. I guess the Energy. The Newfoundland and 426,680 barrels per day, according question is when and Labrador Crown corporation holds to Nalcor. The four offshore proj- minority equity stakes in three of ects have collectively produced 1.9 where.” Jim Keating the province’s offshore oil projects billion barrels of oil since production Executive VP, Offshore Development and is tasked with promotiong the started at Hibernia in 1997. Nalcor Energy sector to international investors. ExxonMobil Corp., Husky Energy In a recent interview, Keating said Inc., and Suncor Inc. are the primary the “unprecedented” interest in new operators in those four producing exploration is partly the result of projects, with Chevron Corp. and new geoscience work and changes Equinor ASA (formerly Statoil ASA) in how licence bidding rounds are also involved. conducted. “I think it’s almost a Husky’s approved West White COLIN LAIRD, CEO KAREN WINSOR, COO 19 xlg.co.uk ONLINE EXTRAS: naturalresourcesmagazine.com NR15 Rose project (now under construc- barrels of oil and 199 trillion cubic tion, with first oil expected in feet of natural gas, all within areas 2022) will mark the province’s fifth that make up just nine per cent “So our peak day is producing project. A sixth will mate- of Newfoundland and Labrador’s rialize if Norway-based Equinor offshore area, which totals 1.8 yet to come. It’s not proceeds with its Bay du Nord million square kilometres. inconceivable to me project in the Flemish Pass area, “We’re talking about a provincial that with modern roughly 500 km east of St. John’s. jurisdiction that surpasses that of technology and modern many countries,” Keating added. “We have a vast offshore.” capabilities, that there are not another four projects out there Vast just waiting to be potential… Who’s discovered.” Keating believes the province’s Jim Keating peak output is yet to come, thanks hunting? Executive VP, Offshore Development Nalcor Energy to potential new development. He According to Nalcor, a number of says increased production at Hebron oil and gas players have joined the alone could help generate a new five existing companies in holding production milestone. “So our peak exploration licences. They include: day is yet to come,” he says. “It’s BP Plc., HP Group Ltd. out of not inconceivable to me that with Australia, Houston-based Navitas modern technology and modern Petroleum, and China’s CNOOC capabilities, that there are not Limited (formerly Nexen), which another four projects out there just recently received federal environ- waiting to be discovered.” mental assessment approval for its According to Nalcor, independent exploration drilling program in the resource assessments have iden- Flemish Pass. tified the potential for 52.2 billion ExxonMobil is currently drilling NR16 NATURAL RESOURCES MAGAZINE | Vol. 22 No. 2 2020 NO TIME LIKE THE PRESENT? in the Flemish Pass, which marks the first exploration associated with the province’s new licencing setup. “We can’t pin all our hopes on one well because there are literally dozens and dozens and dozens of wells that are likely in the plans of these oil companies,” Nalcor’s Keating says. “But it does mark a transition.” The other eight licence holders are expected to start their exploration programs as early as this year, as well as through 2021 and 2022, says Paul Barnes, a director with the Canadian Association of Petroleum Producers (CAPP), whose membership includes all the companies involved with production and exploration in Newfoundland and Labrador. In all, the companies have proposed 10 drilling projects over the next two to four years, with upwards of 100 wells proposed in their applications. More territory will soon be opened up for explo- Suncor operates the Terra Nova field. The Terra Nova Floating Production Storage and Offloading (FPSO) is one of the largest vessels ever built. (Photo: Suncor) ration and more licences will be issued. Nalcor says new exploration licence bidding rounds will be held in 2020 and 2021, including for areas off Labrador—a first. MEETING INDUSTR N BOTH ONSHORE AND OFFSHORE Atlantic Offshore Medical Services From the rugged East Coast of Canada to the tropics, Atlantic Offshore Medical Services has been providing quality industrial medical services in harsh, remote industrial environments since 1978. As the longest standing organization providing integrated occupational and primary and emergency medical services, our depth of experience and thorough screening processes allow us to match every client with the right team of qualied medical personnel. From the provision of dynamic on-site Emergency personnel and MEDEVAC Teams, to routine occupational health and disability management programs – we have the professional team and proven protocols to ensure optimal health of your workforce and the implementation of early return-to-work health management of injured/ill personnel. 1.877.722.4074 4 Henry St., St. John's NL, AC R 709.722.4074 220-33 Ochterloney St., Dartmouth NS, 2 902.469.2667 Atlantic Offshore Medical Services [email protected] | www.aoms.ca make a final investment decision Big potential, but regarding Bay du Nord in mid-2021. Production could start in 2025, if the a new challenge… project is sanctioned, and generate The Bay du Nord project illustrates oil for 10 years and cost $10.9 billion. a new element facing the sector. “It’s a relatively small project,” Fjaer The provincial offshore areas now says. “It’s only 300 million barrels. under, or slated for, exploration are It’s not big.” all further offshore—and in deeper Equinor, based in Norway, has water—than the province’s existing been present in Newfoundland and projects. Labrador since 1997 and is currently Bay du Nord, which Equinor is partnered in three of the four oper- developing with partner Husky, ating projects (the exception is White was discovered in 2013. According Rose). Equinor holds several explo- to Equinor, the project’s 300 million ration licences and plans to drill barrels of recoverable oil are located two exploration wells next year in in water 1,200-metres deep, nearly the Flemish Pass, the area already 500 kms offshore. (For comparison, housing Bay du Nord. the province’s four existing projects are all roughly 350 kms offshore, in depths of roughly 100 metres). “It’s the development that’s the longest from shore and in the deepest Concerns and waters,” Unni Fjaer, a vice president SeaRose FPSO off the east coast of Canada at Equinor Canada, responsible for uncertainty… (Photo: Suncor) the company’s offshore operations The industry’s enthusiasm for new in Canada, said in a recent interview. development is not universally “But it’s not deeper than what we’re shared. The hunt for more oil (and doing in other places in the world.” potentially natural gas) has raised Fjaer says Equinor expects to concerns from the province’s fishing Where Potential Launches Opportunity Premier heavy industrial seaport Construction site of Husky CGS for West White Rose project 625 metres docking facilities Special projects laydown area 709 227 5502 portofargentia.ca NR18 NATURAL RESOURCES MAGAZINE | Vol. 22 No. 2 2020 NO TIME LIKE THE PRESENT? industry. There’s also the threat ORPHAN BASIN of more oil spills off the province, FLEMISH PASS where four spills have occurred since 2018, including 250,000 litres LABRADOR discharged at Husky’s White Rose field in November of that year.
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