Replenishing oil reserves

Moira Baird
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Suncor says more exploration needed off Newfoundland and Labrador

Suncor Energy's vice-president for East Coast Canada, Alan Brown, speaks Thursday morning at the St. John's Board of Trade Business Development Summit at the Delta Hotel in St. John's.

Suncor Energy’s Alan Brown says more offshore oil exploration is needed off Newfoundland and Labrador.

Suncor, operator of the Terra Nova oilfield, is drilling a second well at its Ballicatters prospect on the Grand Banks.

It’s one of only a handful of exploration wells drilled off Newfoundland in recent years.

“Newfoundland and Labrador is running hard, but we do need to think about how we replenish through exploration and development sooner rather than later,” said Brown, Suncor’s East Coast vice-president.

“We’ve got a relatively low-density of wells drilled thus far.”

To date, 362 wells have been drilled in the waters off Newfoundland and Labrador.

Brown spoke Thursday to business people attending a St. John’s Board of Trade Business Development Summit.

Thursday was also the ninth anniversary of first oil at the Terra Nova oilfield, which has pumped 64 per cent of its estimated reserves since Jan. 20, 2002.

“We think there are more discoveries, we hope there are more discoveries to be made,” said Brown in an interview.

Among those hopes: smaller fields that can be tied back to existing production facilities on the Grand Banks. Such fields would have to contain 50 million barrels of oil, or more, to be considered economically feasible.

“Right now, we’ve only demonstrated the ability to develop 50-million-barrel-up satellite tiebacks.”

North Amethyst, a White Rose satellite field operated by Husky Energy, started producing its estimated 70 million barrels of crude last May.

“I’d like to be able to do that with 25-million-barrel prospects, and tie back and make use of the infrastructure we have,” said Brown.

“There are lots of smaller fields and it’s a higher probability of finding them, too.”

The trick is to reduce the costs of finding those fields and developing them.

Brown said one in five exploration wells off Newfoundland is successful — and drill rigs cost about $1 million per day to operate offshore.

“That’s the full cost.”

It includes bringing the rig to the province, and crewing, equipping and supplying it.

“The costs are horrendously high,” said Brown. “If we could take some of that risk out of the front-end of the exploration development production chain — that might be one way.”

Another way is rig-sharing partnerships.

Last year, Suncor, Husky Energy and Statoil Canada signed a second rig-sharing agreement to keep the drill rig Henry Goodrich in the province.

The three-year deal went into effect in November and all three companies will use the rig to drill wells.

“Without that, I think there is very little chance that any one of us would have brought a dedicated rig back,” said Brown.

Organizations: Suncor Energy, Husky Energy, Board of Trade Business Development Summit.Thursday

Geographic location: Newfoundland and Labrador, Terra Nova, East Coast White Rose

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Recent comments

    January 22, 2011 - 09:07

    It would be interesting to know where Mike lives. Could it be in countries where the poor remain poor while the rich become richer? Stay where you are, Mike.We have had too many of your kind for too long!!!

  • Townie batman
    January 22, 2011 - 08:12

    John, Mikes points are valid. Under Williams reign exploration came to a standstill. We need to find more oil for future generations. As for your point self made, that's debatable.

  • Mike
    January 21, 2011 - 14:28

    John, I don’t live in Newfoundland anymore. I live and work internationally where I see other oil theatres of the world prosper with competitive royalty regimes while Newfoundland gets left behind. You have expressed a populist view of Danny and the electorate. That’s great for getting elected but not for long term economic growth. Danny lived off royalties that previous governments put in place. Granted he managed the money he had very well, but he did nothing to encourage long term exploration and investment. I love the place I was born, I just get frustrated when I see opportunity missed because of popular politics that does not make economic sense.

  • John Smith
    January 21, 2011 - 10:51

    Mike, you can take the side of the uber rich oil corporations, which hold more wealth than do many countries in the world, or you can side with the people who live next to the resource. Mr. Williams, a Rhodes scholar, and self made mulit millionaire, sided with the people of the province, and said no more giveaways. It is clear who you side with.

  • Mike
    January 21, 2011 - 09:21

    Exploration to replace reserves is something our previous Premier did not understand. Over the last 8 years exploration has been dead because of his endless fight with oil companies. Hopefully any new government will understand the importance of exploration including the economics of risk taking to explore for oil and gas. There must be a balance so that the government revenues competitive in such a manner that will attract investment in exploration over the long run. Hopefully any new government will understand this and take the long view over popular politics.

    • Ed
      January 21, 2011 - 14:18

      Danny Williams relations with corporate oil were so poor that Husky CEO John Lau agreed to Nalco's equity buy into the White Rose expansion a week before the 2007 election campaign. With enemies like that...