Last in a six-part series
Finance Minister Tom Marshall recently told the St. John’s Board of Trade he looks to the chairman and CEO of the Canada-Newfoundland and Lab-rador Offshore Petroleum Board (CNLOPB), Max Ruelokke, whenever he wants an update on how much the province can expect to receive in oil royalties.
In turn, Ruelokke looks to staff within the board’s resource management department.
The department provides updates on production as well as estimations on the reserve of resources still available in the ground, so as not to have the province relying on estimations by the oil companies.
One of the department’s responsibilities is to watch the metering of oil production offshore — a technical component that essentially comes down to making sure there is a fair accounting of every drop of oil coming from the ground offshore Newfoundland and Lab-rador.
“They look to us to see how much, how many barrels (of oil),” said Frank Smyth, manager of the department.
“We have oversight of the authority and verification of every one of those meters every year.”
Smyth said compliance is “grossly high” when it comes to the regulations around metering and accounting.
Aside from this oversight, staff within the department keep an accounting of rock and liquid sampled during exploration and production offshore.
Samples valued decades after recovery
While it typically costs millions for an operator to collect offshore samples, they remain, for the most part, the property of the board.
The oil companies gets a portion for study, but the rest remains with the CNLOPB.
Samples come in the form of rock cylinders (core), small pieces of rock kicked up during the drilling process inside drilling mud (cuttings) and liquid product from various wells.
What is held by the CNLOPB is filed away at the Core Storage and Research Centre (CSRC) at 30 Duffy Place in St. John’s.
Budget 2009 earmarked $1.5 million (shared 50/50 with federal government) for the expansion of the CSRC, mainly for added storage. That work was completed in 2010.
“It’s like a very valuable library,” geological supervisor David Mills, who is based at the centre, told The Telegram during a tour of the facility.
In the main core sample viewing room, Mills had set out about 140 rectangular boxes, placed into three rows, filled with cylindrical core. The boxes were filled with pieces of one, large core sample. Through changes in rock type, tiny fractures, colouring, the presence of fossils less than a centimetre in length and other indicators companies gather information from these cores about a particular area.
The information adds to an estimation of whether or not the area might be worth further investment, potentially holding oil and/or gas reserves.
For the money and work put into collecting core samples like the one set out, Mills said the operator gets the benefit of some time, having the information to themselves.
After two years for exploration well, however, anyone can go to the CNLOPB and get a look at samples from a drilling project.
Students, researchers and scientists employed by major oil companies come to the CSRC “all the time” to review even decades-old samples, Mills said.
As well, areas wherein major companies take a keen interest often lead to an interest in area samples from competitors.
“The first Orphan (Basin) well, when that became (publicly) available, there were people lined up,” Mills said.
Property of the people
Samples cannot be removed from the CSRC without an express authorization from the CNLOPB.
Smyth said, prior to the CNLOPB being established, the collection of core samples from offshore Newfoundland and Labrador was being kept in Nova Scotia. Once the Atlantic Accord Acts were signed, however, that changed.
“We sent over tractor-trailers and picked it up and brought it back here,” he said.
Now, the Core Storage and Research Centre is a hub for investigations by potential investors in the offshore.
With the expansion, it can hold as much as three times the amount of material currently housed within its walls.
As for the public’s consideration of his department and the board as a whole, Smyth said the oversight work being conducted by the CNLOPB is being done by highly qualified, dedicated people and in the interest of the people of the province.
“We work for their interests — that’s what we do,” he said.
“How you get someone to accept that, to believe it, I don’t know.”