old metaphor, "it's the tip of the iceberg," is one of the golden
rules that oil and gas explorers and producers live by in the Grand
Banks of the Canadian East Coast offshore.
At the 874-million-barrel Hibernia oil field — situated
350 kilometers east southeast of Newfoundland in 90 meters of water
— the outer walls of the cement-filled, gravity-base production
structure are reinforced with ice teeth to withstand the impact
from a six-million-ton iceberg.
At the 370-million-barrel Terra Nova oil field, situated
35 kilometers east of Hibernia, a consortium led by Petro-Canada
has designed the first-of-its-kind, double-hulled FPSO vessel that
is capable, in short notice, of disengaging its nine anchors and
moving out of the path of an oncoming iceberg.
Such are the challenges of producing oil and gas
in the harsh and unforgiving conditions of the North Atlantic, otherwise
known as "iceberg alley." Temperatures average five degrees Celsius;
winds howl at 35 kilometers per hour; fog banks frequently prevent
helicopters from landing on offshore facilities.
Pip Rudkin is to icebergs on the Grand Banks what
Red Adair is to oil field fires. Manager of environmental services
for Provincial Airlines in St. John's, Rudkin specializes in protecting
offshore facilities and rigs from icebergs, growlers and bergy bits;
interception methods include lassoing, towing and water cannons.
Between March to May 2000, Rudkin's team identified
800 icebergs in iceberg alley, tracked 83 by air, satellite and
radar, and diverted 43.
"Hibernia can't move out of the way," Rudkin said.
"Hibernia's last resort is to withstand the impact of an iceberg."
of the oil and gas resources is paramount — the Grand Banks contains
several world class oil and gas fields:
discovered in 1979 by Chevron Canada Resources, the $5.8 billion
Hibernia field development came on production in 1997. Hibernia
currently produces about 160,000 barrels/day of light crude from
a Lower Cretaceous sandstone reservoir.
Eighty directional wells will be drilled during the
Hibernia development phase.
$4.4 billion development of the adjacent Terra Nova oil and gas
field includes the construction of a Floating Production, Storage
and Offloading vessel (FPSO). Production was expected to begin in
late December at 150,000 barrels/day from an Upper Jurassic sandstone
Twenty-four directional wells are going to be drilled
to maximize field recovery from a total reserve of more than 400
million barrels recoverable.
Petro-Canada drilled its first well into the separate
Far East Block late last year, encountering 80 meters of Jeanne
d'Arc reservoir and proving that additional reserves are hiding
in other faulted compartments.
Hebron-Ben Nevis — situated due north of Terra Nova and operated
by Chevron Canada Resources — the combined field is estimated to
contain 300 million recoverable barrels.
The Husky Energy operated White Rose oil and gas
field is estimated to contain an initial 230 million barrels of
recoverable reserves in a South Pool and 1.7 Tcf of natural gas.
All of these fields are located in the Grand Banks,
in water depths averaging 100 meters.
'Here to Stay'
According to the Canada-Newfoundland Offshore Petroleum
Board (C-NOPB), discovered reserves in the Grand Banks total 2.1
billion barrels and 5.1 Tcf of natural gas, with 413 million barrels
of associated liquids.
The C-NOPB estimates that the Mesozoic sedimentary
basins of the Grand Banks contain potential recoverable reserves
of 4.6 billion barrels of oil and 18.8 Tcf of natural gas.
Although many of the larger fault-bounded structures
have been drilled and developed, government regulators and industry
geoscientists concur that these current proven reserves represent
the "tip of the iceberg."
To date, 127 exploration wells, 29 delineation and
37 development wells have been drilled in the Grand Banks — that's
in an area totaling 900,000 square kilometers. Companies currently
hold over 10 million acres under 38 active exploration licenses,
and a total of 370,000 acres under 47 "significant discovery licenses"
and four production licenses.
The Jeanne d'Arc Basin is the largest (5,000 square
kilometers) and most explored of the Mesozoic basins (Carson,
South Whale, Orphan) in the Grand Banks. Recently, industry has
ventured into the deeper waters of the adjacent Flemish Pass Basin.
All the basins were affected by three stages of rifting.
Extensional faulting triggered by rifting and salt movements sets
up the structural plays. Reservoirs are contained in thick sequences
of Jurassic to Lower Cretaceous sandstones. Kimmeridgian Egret shales
have a Total Organic Carbon (TOC) of 7-10 percent, and are comparable
to their source rock counterpart in the North Sea.
Oil and gas exploration has gone through three major
cycles in the Canadian East Coast offshore during the 1970s, 1980s
Canada's National Energy Program (NEP) — enacted
in 1980 and designed to develop Canada's self-sufficiency — resulted
in a frenzy of activity during the 1980s on the Grand Banks, the
Labrador Shelf and the Scotian Shelf. Under the NEP, companies with
Canadian content received tax rebates of 80 cents on the dollar
for drilling and seismic, and for the construction of seismic vessels
and drilling rigs. The third and final phase kicked off during the
mid- to late-1990s, and hasn't stopped.
Historically, many international E&P companies
exited after one exploration cycle, often only drilling a couple
of offshore wells. Canadian companies who have remained focused
on the East Coast Frontier, however, are reaping the rewards.
"We've got resilience, we know our basins," said
Michael Enachescu, Husky Energy's geophysics team leader for Canada
frontier and international exploration. "We're here to stay."
The Scotian Shelf
The Scotian Shelf lies several hundred kilometers
east of the southern Grand Banks, adjacent to Nova Scotia. It is
approximately 100 to 150 kilometers wide and about 900 kilometers
long. Water depths vary from less than 100 meters to 3,500 meters.
E&P companies are producing oil and natural gas
from a series of basins that contain up to 8,000 meters of sediments.
Excluding development and delineation wells, the Scotian Shelf has
been tested by only 130 exploratory wells.
In 2000, 30 years after its initial discovery, the
$2 billion Sable Offshore Energy Project (SOEP) came on production.
SOEP, led by ExxonMobil, is situated 225 kilometers off the east
coast of Nova Scotia.
SOEP contains an estimated three Tcf of recoverable
gas, which equates to a 25-year supply. Daily production from Phase
One (Venture, North Triumph and Thibault gas fields) averages about
500 MMcf/d of raw gas. After processing and liquids removal, the
sales gas is shipped in the Maritimes and Northeast Pipeline (M&NP)
to markets in Nova Scotia, New Brunswick and the northeastern seaboard
of the United States.
The $1 billion Phase Two (Alma, Glenelg and South
Venture gas fields) is expected to commence production between 2004
The Cohasset/Panuke Field, located 41 kilometers southwest of Sable
Island, was Canada's first commercial offshore oil field. From 1992-1999,
44 million barrels of oil were produced before the economic life
of the field was reached. The field is in the process of being decommissioned.
Underlying the depleted production at Cohasset/Panuke,
however, is a new exploration play for the Scotian Shelf, and a
one Tcf discovery called Deep Panuke field.
Hogg, Pancanadian Energy's exploration manager, Atlantic Canada
Frontier and International Business Unit, describes the drilling
of PP-3C, the discovery well at Deep Panuke.
"We tested gas at 55 mmcf/day in the fog," Hogg said.
"No one saw it, so we didn't tell anyone."
Pancandian quietly went about its business, and between
1998-2000 drilled three more 52-57 mmcf/d wells into an Upper Jurassic
carbonate bank with a net pay of 69 meters.
Deep Panuke is scheduled to come on stream in 2005
at 400 mmcf/d.
Hogg, a past chairman of the AAPG House of Delegates,
likens the multiple play types of the Scotian Shelf and Slope to
those of offshore Brazil and offshore Angola. He estimates the Jurassic
Carbonate Bank play to cover 10,000 square kilometers, and estimates
its potential between five to 15 Tcf of natural gas.
The Scotian Salt Province, according to Hogg, encompasses
an area of 60,000 square kilometers and may contain five to 25 Tcf
of natural gas and one to three billion barrels of oil. Undrilled
salt plays include diapers, classic turtle structures, salt toe
and sub salt.
The Sable Sub-Basin — which contains the six SOEP
fields — is 10,000 square kilometers in size and contains discovered
reserves of 8.8 Tcf and 60 million barrels of oil. Hogg estimates
its potential is between five to 20 Tcf and 750 million barrels
of oil. Sandstone reservoirs of Upper Jurassic to Lower Cretaceous
age are trapped in listric fault-bounded structures. The late to
mid Jurassic Verrill Canyon source rock contains 2-3 percent TOC.
On the Scotian Shelf, companies currently hold over
19 million acres under 59 active exploration licenses; 215,000 acres
under 33 significant discovery licenses and 61,000 acres under six
In 2000, offshore geophysical activity was at an
all time high with the acquisition of 12,000 square kilometers of
3-D seismic, 87,000 kilometers of aeromagnetic surveys, 18,000 kilometers
of shallow seismic seabed surveys and 8,000 kilometers of 2-D seismic.
In November 2001, the C-NSOPB announced the "winners"
of its latest bidding round. Nine parcels totaling 3.9 million acres
raised $527.19 million in exploration work commitments to be conducted
during the next five years. Marathon Canada Limited left the most
money on the table, putting up $176.69 million for a 333,539 acre
parcel situated in 1,000 to 3,500 meters of water. Joining forces
with Murphy Oil Company Limited and Norsk Hydro Canada Oil and Gas,
Marathon took a 50 percent interest in a 337,316 acre deep water
parcel that went for $193.62 million.
"We're on the cusp of fantastic things," exclaims
David Brown, senior petroleum geologist with the C-NSOPB. "The more
that I see, the more it reinforces my opinion that we've got an
outstanding potential in the deep offshore plays."
Nova Scotia's deep plays, Brown said, have the three
major components seen elsewhere in the world: a trailing continental
margin, a large delta complex, and a mobile substrate comprised
of salt. Lying in the deep water are undrilled Tertiary and Cretaceous
submarine fan sequences.
Brown anticipates about 30 wells will be drilled
offshore Nova Scotia in 2002.
Things Heat Up Onshore
Not all the drilling next year for eastern Canada
will take place offshore. With more than 3.9 million acres of lands
leased onshore for oil and gas exploration, things are heating up
in the Carboniferous age basins of Nova Scotia.
Historically, numerous oil and gas shows have been
encountered onshore in diamond drill holes targeting base metals,
salt and potash:
- Devon Energy holds the rights to explore in concessions totaling
2.4 million acres.
- Hunt Oil has 740,511 acres under lease onshore.
- Pancanadian Energy recently pledged $3.95 million in exploration
work commitments to explore a 3,200-acre coal bed methane concession.
Jack MacDonald, senior petroleum geologist and rights
administrator with the Nova Scotia Petroleum Directorate, anticipates
that 25 onshore wells will be drilled this year by various operators
in Nova Scotia and in the adjacent Maritime Provinces of New Brunswick
and Prince Edward Island. Three factors are driving onshore exploration:
- The existence of the pipeline that is currently shipping natural
gas to the Boston market.
- The Stoney Creek Field in New Brunswick, which produced 28 Bcf
of natural gas and 830,000 barrels of oil.
- Several recent commercial gas discoveries in the Carboniferous
Horton sandstone play near Sussex, New Brunswick.