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PROJECT DESCRIPTION FOR WESTERN NEWFOUNDLAND DRILLING PROGRAM, 2013-2019 Prepared by for and Black Spruce Exploration Corp. March 2013 Project No. SA1174 PROJECT DESCRIPTION FOR WESTERN NEWFOUNDLAND DRILLING PROGRAM, 2013-2019 Prepared by LGL Limited environmental research associates 388 Kenmount Road, Box 13248, Stn. A. St. John’s, NL A1B 4A5 Tel: 709-754-1992 [email protected] www.lgl.com In Association With D.G. Taylor Inc. 74 Swansea Street CBS, NL A1W 4S5 Tel: 709-834-2461 / 7158 Skype ID: dgtaylorinc www.dgtaylorinc.com and Canning & Pitt Associates, Inc. Box 21461, St. John's, NL A1A 5G2 Tel: 709-738-0133 www.canpitt.ca Prepared for Shoal Point Energy Ltd. 3rd Floor, 189 Water Street St. John’s, NL A1C1B4 Tel: 709-739-6679 www.shoalpointenergy.com and Black Spruce Exploration Corp. 3rd Floor, 189 Water Street St. John’s, NL A1C1B4 Toll-Free: 1-855-438-7711 www.blspexp.com March 2013 Project No. SA1174 Suggested format for citation: LGL Limited. 2013. Project Description for Western Newfoundland Drilling Program, 2013-2019. LGL Rep. SA1174. Rep. by LGL Limited, in association with D.G. Taylor Inc., CBS, NL, and Canning & Pitt Associates Inc., St. John’s, NL, for Shoal Point Energy, St. John’s, NL, and Black Spruce Exploration Corporation, St. John’s, NL. 22 pp. Table of Contents Page Table of Contents ..................................................................................................................................... ii List of Figures .......................................................................................................................................... iii List of Tables ........................................................................................................................................... iii 1.0 Introduction and Regulatory Context ............................................................................................... 1 2.0 The Proponent ................................................................................................................................ 4 2.1 Objectives ..................................................................................................................................... 4 2.2 Project Management .................................................................................................................... 5 2.3 Social Responsibility & Canada-Newfoundland & Labrador Benefits .......................................... 5 2.4 Requirements for Equipment, Supplies, Materials ...................................................................... 6 2.5 Proponent Contacts ...................................................................................................................... 6 2.6 Land Holdings ............................................................................................................................... 6 3.0 Proposed Project ............................................................................................................................ 8 3.1 Name and Location....................................................................................................................... 8 3.2 Project Overview .......................................................................................................................... 8 3.2.1 Spatial Scope ................................................................................................................... 9 3.2.2 Temporal Scope ............................................................................................................... 9 3.2.3 Alternatives to the Project and Within the Project ....................................................... 10 3.2.4 Program Phases and Scheduling ................................................................................... 11 3.2.5 Site Specific Plans for 2013............................................................................................ 11 3.3 Description of Proposed Drilling Program Phases and Activities ............................................... 12 3.3.1 Project Phases ............................................................................................................... 12 3.4 Environmental Management ..................................................................................................... 16 3.4.1 Spills ............................................................................................................................... 16 3.4.2 Near-Wellbore Stimulation ........................................................................................... 17 3.4.3 Emissions and Waste Discharges .................................................................................. 17 4.0 Environmental Features ................................................................................................................ 20 4.1 Geographic and Temporal Scoping of the Assessment .............................................................. 20 4.2 Valued Ecosystem Components ................................................................................................. 20 4.3 Other Users ................................................................................................................................ 21 4.3.1 Fisheries ......................................................................................................................... 21 4.4 Consultations .............................................................................................................................. 21 5.0 References .................................................................................................................................... 22 Western Newfoundland Drilling Program LGL Limited Project Description Page ii List of Figures Page Figure 1.1 Location of Exploration Licences 1070, 1120 and 1097R. ................................................................ 1 Figure 3.1 Delineations of Project and Study Areas. ....................................................................................... 10 Figure 3.2 Approximate location of well proposed for Lark Harbour ............................................................. 11 Figure 3.3 Approximate location of well proposed for Sally’s Cove. ............................................................... 12 Figure 3.4 Schematic of a typical drill site layout. ........................................................................................... 14 List of Tables Page Table 3.1 Current Shoal Point Energy Ltd. Land Interests in Newfoundland and Labrador............................. 8 Table 3.2 Drilling Operations Timetable ........................................................................................................... 9 Table 3.3 Estimated Vehicle Traffic Associated with Drilling Activity .............................................................. 9 Table 3.4 Typical Chemical Additives Used in Near-Wellbore Stimulations. ................................................. 19 Western Newfoundland Drilling Program LGL Limited Project Description Page iii 1.0 Introduction and Regulatory Context The Proponent, specifically Shoal Point Energy Ltd. (SPE) and Black Spruce Exploration Corp. (BSE), proposes to undertake an exploration and delineation drilling program (the Project) within its current Exploration Licenses (EL 1070, EL 1120, EL 1097R) on the west coast of Newfoundland from 2013 to 2019. The locations of the three ELs are indicated in Figure 1.1. Under the terms of a Farmout Agreement between SPE and BSE, dated January 11, 2013, BSE will be the Operator. It should be noted, however, that subject to regulatory approvals, SPE, BSE or any future partners may serve as Operator during the Project. The Operator will honour all commitments, mitigations, etc., for any undertaking contemplated in this Project Description and subsequent Environmental Assessment. In 2013, under this Project Description and subsequent environmental assessment, the Operator plans to conduct exploration drilling on a minimum of two wells, one on EL 1120 and one on EL 1097R. Depending on the results from the initial two wells, the Proponent may drill additional wells on any of these three license areas (EL 1070, EL 1120, EL 1097R) from 2013 to 2019. Due to the nature of the target geological formations to be drilled, the Proponent anticipate the need to use near-wellbore stimulation technology which involves the injection of water-based or other fluids under high pressure to stimulate the target reservoir formations and allow the hydrocarbons therein to be recovered. Near-wellbore stimulation does include hydraulic fracturing. Industry best practices will be followed for any near-wellbore stimulation operations. Figure 1.1 Location of Exploration Licences 1070, 1120 and 1097R. Western Newfoundland Drilling Program LGL Limited Project Description Page 1 The information presented in this Project Description is intended to enable the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) operating under the Canada-Newfoundland Atlantic Accord Implementation Acts to prepare a Scoping Document. The associated Environmental Assessment (EA) will be guided by the Scoping Document as well as technical and scoping advice received from the C-NLOPB, other federal agencies, and stakeholders engaged by the Proponent. In accordance with its mandate under the Atlantic Accord Implementation Acts, the C-NLOPB may issue an Approval to Drill a Well to allow SPE to carry out the drilling