The 1970s were tumultuous years for the oil industry.
In October 1973, impacts of the Arab-Israeli War caused the price of oil to jump from $3 to $12 a barrel. The Arab Oil Embargo prevented the export of oil to countries like the United States and Netherlands and caused enormous difficulties - including long lines at U.S. gas stations due to gasoline shortages.
In 1979, the price of oil increased to $14 per barrel due to oil production cutbacks related to continued political instability in the Middle East, including the departure of the Shah from Iran.
By 1980, oil prices were up to $35 per barrel, and the public became obsessed with the issue of oil supply. Indeed, many people believed that the world was running out of oil.
The relationship between these events and the drilling of the Texaco Shell et al Blue H-28 well in Newfoundland will become apparent later in this article.
In 1975, Calgary-based Texaco Canada was contacted by Shell Canada, which owned a massive deepwater exploration permit in offshore Newfoundland. Shell wanted to farm-out its permit to other oil companies.
The permit's location was in the Orphan Basin, approximately 350 kilometers northeast of St. John's, the capital city of Newfoundland.
The permit was called the Gander Block - it consisted of 5.6 million acres, and late 1960s vintage seismic showed weak evidence of some huge structures within the block.
A team was formed to evaluate this farm-in opportunity, which included chief geologist John Williams, senior geologist Peter Bower, exploration geologist Dave Vander Lee, chief geophysicist Trevor Bell and senior landman Ray Howells.
The team was entirely Canadian except for Al Hanners, an American who was Texaco Canada's division manager. Hanners had worked most of his career with Texaco Inc. in New York and Trinidad, and also had worked on many of the big oil plays in the Middle East, including Saudi Arabia.
The closest control well at that time was the BP Bonavista C-99 well, located 90 miles southwest of the block - and due to the lack of well control, exploration of this block would truly be rank exploration.
Texaco Canada's geoscientists studied the seismic and concluded the structures were possible massive reef buildups similar to the prolific Golden Lane-Reforma Lower Cretaceous reefs of Mexico.
An encouraging closer piece of supporting evidence came from a Joides DSDP core hole drilled on Orphan Knoll, which penetrated 180 feet of Lower Cretaceous carbonate sands and shaley limestones. Also, dredge samples from Flemish Cap contained Lower Cretaceous foraminifera, Orbitolina conoides, which was believed to be indicative of warm temperature, reefal environments.
On the basis of this very minimal data and regional geology, the Texaco Canada team postulated that reefs similar to Golden Lane could extend northward from Mexico into Newfoundland - including the Gander Block.
Selling the Opportunity
Once the team had finished its technical assessment of the Gander Block, Hanners traveled to the headquarters of Texaco Canada's parent company, Texaco Inc., in White Plains, N.Y., to "sell" the project to Texaco's executive management.
This would be highly challenging.
He was trying to convince Texaco to drill a rank exploration well in almost a mile of water, to a possible depth of over 20,000 feet, in Newfoundland's ice-infested "Iceberg Alley" - one of the world's most hostile environments. During the summer months this area had extensive pack ice and frequent thick fog; occasional storms had waves of up to 60 feet.
When Hanners presented his recommendation to farm into the block, the deepest water depth drilled at that time was by Shell Oil in 1974 in Gabon, in 2,097 feet of water. Texaco was a conservative company more focused on oil production, refining and marketing rather than exploration, so it was quite audacious for this drilling project to be proposed to the company.
In his presentation, Al pitched the prospects as possible reefs - but he also said that the structures, in a way, looked similar to the Ghawar oil field in Saudi Arabia, the world's biggest conventional oil field.
Since Texaco was a partner in Saudi Aramco, mentioning Ghawar made the ears of the Texaco executives perk up. The possibility of finding another Ghawar basically sold the farm-in to Texaco's execs.
However, another highly compelling reason to explore the Gander Block was a financial incentive known as the Canadian government's PIP program, which stood for Petroleum Incentive Program. Due to the concerns about world oil supply, the federal government in Ottawa believed it was crucially important for Canada to have an understanding of the possible oil resources in its minimally explored frontiers, which were East Coast Canada and the Arctic.
The PIP program came into effect in 1975. Under it, frontier drilling programs were subsidized by the federal government with what was informally called "PIPs grants," whereby Ottawa paid 95 cents on the dollar and the oil companies paid only five cents.
Accordingly, Texaco Canada drilled the Blue well almost cost-free.
Despite the minimal cost, the company did take on a lot of risk in terms of operational and safety risk in drilling in unprecedented water depths in such an extreme environment.
Exploring the Opportunity
Texaco's management approved the farm-in into the block on condition that other companies would join the program to share the risk and make it a multi-company campaign. In the next year, Calgary-based Home Oil, Dome Petroleum, Hudson's Bay Oil & Gas and Petro Canada become partners with Texaco Canada in the block along with Shell Canada, which retained an interest in the block.
The partnership was committed to drilling at least one well in the block.
In 1976 the partnership shot new seismic in the block; approximately 1,760 kilometers of 2400 CDP data was recorded. Noteworthy was that Texaco Canada's senior geophysicist Rennie Reghenas spent six weeks non-stop as the company rep on the seismic boat in often storm-tossed seas.
The new seismic data showed that the structures were not reefs, so the reef play was terminated. But the seismic did show a number of huge structural closures overlaying interpreted basement, so those became the primary targets.
A personal note: I graduated from the University of Alberta in 1971 and at the young age of 21 worked for two years as a mudlogger ("gas sniffer") for Continental Laboratories, which had a contract with Amoco Canada, operator of a multi-well exploration drilling program on the Grand Banks of Newfoundland.
All of Amoco's wells turned out to be dry holes - but mud-logging was excellent experience and taught me a lot about wellsite geology and offshore drilling operations.
I joined Texaco Canada in 1973. In 1978 I was area geologist for northern Alberta and the East Coast Canada was added to my area. I became the project geologist for Blue H-28 and was much involved with the upcoming Newfoundland drilling program.
So I started my career in the oil industry in 1971 on the Grand Banks of Newfoundland and seven years later I returned there to coordinate an incredible deepwater drilling project.
Drilling Blue H-28
The well drilled in the Gander Block was called "Blue" after the world's largest mammal, the blue whale, since it was going to be drilled on one of the world's largest prospects - Ghawar was the world's biggest oil field, and Blue was one of the world's biggest oil prospects.
In mid-1979 Blue H-28 spudded in 4,876 feet (1,486 meters) of water and was drilled problem-free to a drill depth of 20,023 feet (6,103 meters). The well was drilled by an almost new dynamically positioned drillship, the Discoverer Seven Seas, which was built in 1976.
Blue H-28 found very close to prognosis the objective Lower Cretaceous section - approximately 180 feet of clean, medium to coarse-grained sandstones were intersected. The electric logs indicated 19 percent porosity, but the logs also showed the sands to be water-bearing.
The well was plugged and abandoned.
Still, the following records were achieved with the drilling of Blue H-28:
♦ The world water depth record for drilling had been held by a well drilled in early 1979 in 4,441 feet (1,354 meters) of water by Getty Oil in offshore Spain. Blue H-28 extended the world record by 435 feet (133 meters).
♦ Blue H-28 also extended the Canadian water depth record by 2,034 feet (620 meters), since the previous record was held by a well drilled in 1978 by Chevron in offshore Nova Scotia in a water depth of 2,842 feet (866 meters).
♦ The Canadian drill depth record was held by a well drilled in 1973 by Union Oil, to a depth of 18,677 feet (5,692 meters), but this record was extended by 1,346 feet (410 meters) with the drilling of Blue H-28.
Several connections to Blue H-28 remain, both industry wide and on a personal note.
First, Blue H-28 remains a very important control well in the minimally explored Orphan Basin.
Second, the Discoverer Seven Seas is now 39 years old, but it remains an important deepwater drilling rig. It was rebuilt in 1997 and is still drilling deepwater wells worldwide, most recently in Indonesia.
Third, after 44 years in the oil patch and at the age of 65 years, I remain active in the oil industry, currently as a consultant for Gaffney, Cline & Associates in Luanda, Angola.
When the Blue H-28 project was completed I accepted a transfer with Texaco to Sumatra, Indonesia, where I worked for seven years. In 1986 I transferred back to Calgary with Texaco Canada.
In 1987 I was invited by the Offshore Technology Conference (OTC) in Houston to present a paper on Blue H-28 at its 20th annual event, in a special session devoted to "Milestones in Deepwater Drilling."
The paper contained as much technical information as I could possibly squeeze into it, and it was published in the OTC Proceedings.
In 2005 and 2006 I gave presentations on the Blue H-28 project in Calgary to the Canadian Society of Petroleum Geologists (CSPG), and portions of the OTC paper were re-published in the CSPG's Reservoir magazine in January 2007.
With the passage of time, the significance of deepwater wells like Blue H-28 seem to pale in comparison to recent exploratory drilling in water depths exceeding 10,000 feet (3,050 meters).
Indeed, the current water depth record is held by a well drilled in offshore India in 2013 by India's ONGC, in 10,414 feet (3,174 meters) of water.
I believe it is important that historic geological, geophysical and drilling data, such as was obtained from Blue H-28, be preserved and not fade into oblivion as the years pass - and that's what inspired me to write this story for the EXPLORER's Historical Highlights.