Grand Banks Thrives in Iceberg Alley

Finding Gas in the Fog

The 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."

Protection of the oil and gas resources is paramount — the Grand Banks contains several world class oil and gas fields:

Originally 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.

The $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 reservoir.

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.

Image Caption

Huge icebergs routinely threaten operations in the Grand Banks of the Canadian East Coast offshore, but companies are still finding plenty of ways to find success.
Photo courtesy of Provincial Airlines Limited Environmental Services

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The 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."

Protection of the oil and gas resources is paramount — the Grand Banks contains several world class oil and gas fields:

Originally 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.

The $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 reservoir.

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.

At 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 and 1990s.

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 and 2007.

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.

John 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 production licenses.

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.
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