Majors Commit Billions To Develop Canada’s Offshore Reserves in Atlantic

By Ashok Dutta, March 26, 2014

These are changing times for the offshore oil and gas industry in the two eastern Canadian provinces of Nova Scotia and Newfoundland and Labrador (NFL) along the Atlantic coast. In late 2012, Shell Canada and BP unveiled separate plans for mega investments over the coming few years in Nova Scotia, even as Statoil confirmed last September a discovery in NFL that it termed as the “biggest find outside of Norway” and the “12th largest made globally since 2010.” 

For its part, Shell Canada said it would spend $957 million on four blocks located about 200 kilometers southwest of provincial capital Halifax in Nova Scotia with water depths of 1,500 to 3,000 meters.

Under the terms of the agreement Shell signed with the provincial/federal regulator in Nova Scotia, it is mandated to spend that money over its nine-year exploration license that expires in 2021.

Shell Canada plans to drill up to seven exploratory wells at its licensed areas (see map), the company said in a submission made in December 2013 to the federal Canadian government.

The wells will be drilled from 2015 to 2019 and specific locations will be determined using data gathered as part of the Shelburne Basin 3D seismic survey that it conducted over the summer of 2013, Shell said.

Randy Hiscock, Shell’s manager for business development and new ventures, said at an industry event last October the earliest drilling could start would be 2015, depending on the results of the seismic research, rig scheduling and getting the proper equipment in place. 

“We feel pretty positive about early results of the seismic program,” he said at the Maritimes Energy Association’s annual conference in Halifax. “As we get through the interpretation of the seismic data, it will determine how and if and when we move forward. But I’m fairly confident that it’s looking good, and oil is what we are banking on rather than natural gas.”

The verdict will be awaited, but meanwhile BP, along with its contractor WesternGeco, is planning to conduct a seismic survey this summer of its acreages also in offshore Nova Scotia and where it has committed a capital expenditure of $1.05 billion.

No comments were immediately available from BP’s office in Calgary, but industry sources said the survey will be conducted over all four blocks at the same time.

“The new blocks are located on the deepwater southwestern Scotian Slope and the Sable sub-basin, where there is strong evidence of early Jurassic-restricted marine oil-prone source rock and also where 23 significant gas and oil discoveries have been made to date,” Kathleen Funke, a spokeswoman for the Canada-Nova Scotia Offshore Petroleum Board, said from Halifax.

Nova Scotia is home to the 600 million cubic feet per day Sable Offshore and 300 million cubic feet per day Deep Panuke facilities, two of the largest natural gas exploration and production facilities in eastern Canada operated by ExxonMobil and Encana, respectively. 

Newfoundland and Labrador Update

Major upstream activity is also planned in NFL, with the Canada-Newfoundland and Labrador Offshore