Drilling onshore exploration wells may be cheaper than offshore drilling, but it isn’t as fast as Nalcor Energy was expecting at Parsons Pond.
The province’s energy corporation estimated it needed about 50 days to drill each of the three planned wells in its $20-million exploration program on Newfoundland’s west coast.
Instead, they’re taking longer — 78 days in the case of Finnegan, the second well.
That’s adding pressure to the exploration budget, though the final numbers aren’t in yet.
Jim Keating, vice-president of Nalcor’s oil and gas division, chalks it up to underground faults, or breaks, in the Earth’s crust and more than 3,100 metres of very hard rock.
The result: slow drilling.
“We’ve had some difficult drilling,” said Keating. “Faulting is difficult to drill in because you need to make sure you’ve chosen the right drill bit to get across faults.
“Faults are typically difficult to cross because they lead to slipping of the drill bit and you need to keep it straight. So how you drill in heavily faulted zones is, unfortunately, just slow.”
Despite the delays, Nalcor has reported natural gas shows at the two wells drilled so far.
The company will flow test the first well, Seamus, to quantify how much natural gas it may have discovered there last spring.
The rig is on site and Keating expects the test to begin by early next week. Once the test is done, the well will be plugged again with cement.
“That should seal the leak,” said Keating.
In late October, Nalcor discovered a gap smaller than a pin-hole is allowing natural gas to leak through the cement barrier that was supposed to seal the Seamus well. It’s called a micro-annular leak.
The well has been monitored and vented since drilling was suspended in May.
Keating said testing and re-cementing Seamus is expected to take four to six weeks. It’ll take less time if the flow rates are low — meaning the natural gas discovery isn’t a big one.
Then, the rig will move to test the Finnegan well.
The cost of flow testing the wells is not included in Nalcor’s exploration budget.
Keating said those tests can typically cost $2 million to $3 million apiece — and aren’t usually part of an exploration budget.
They’re only needed if you find something worth testing.
What is built into the exploration budget is the day rate for leasing an onshore drill rig — something Keating said ranges from $25,000 to $30,000. That’s just for the rig.
Additional costs — fuel, crew, drilling mud and well casing — bump up the price to between $50,000 and $75,000 per day.
It’s still cheaper than offshore exploration. Day rates for a pair of offshore rigs currently working off Newfoundland are much higher — US$353,000 for the GSF Grand Banks and US$381,000 for the Henry Goodrich. Supplies and crew are extra.
That’s according to an October fleet update issued by Transocean, the company that owns both drill rigs.
As for the third well in Nalcor’s west coast exploration program, Keating said drilling could begin by late January. The road to that well, named Darcy, is still under construction.
Its completion will determine the drilling date.
“We anticipate that road being completed early in January,” said Keating.