Oil and gas junior planning to drill in western N.L. in 2014
Black Spruce Exploration is unwavering in its plans for oil development in western Newfoundland, despite a recent loss by one of its partners Shoal Point Energy.
Last week, Shoal Point Energy revealed it was losing a key exploration licence for its onshore to offshore drilling plans, an area known as EL 1097R. The company also waved goodbye to a $1 million deposit it had put down on the licence.
The loss was due to a lack of required exploration activity in the area, something Shoal Point Energy’s leadership said was the result of an uncertain regulatory environment within Canada’s most easterly province.
Meanwhile, Black Spruce Exploration had plans for the exploration area lost by Shoal Point Energy.
Under a previously announced partnership agreement, Black Spruce was to be the operator — the lead hand, co-ordinating the actual work — on drilling proposed onshore to offshore test wells throughout western Newfoundland, including in the area of EL 1097R.
However, according to Black Spruce Exploration president and CEO David Murray, his company had no cash invested into the lost licence.
“It’s not our licence until we drill on it. So they’re the ones that put up all the money and things like that and pay for the licence,” he said.
“So, you know, for us at Black Spruce, we’ve agreed to drill on the lands and the only plan we had for the EL1097R was to drill one validating well and we didn’t have any plans for drilling on there for the next five years. So for us, it’s a minor change, but not a significant change.”
Dating back to April, Murray said, his company registered the potential for a fracking moratorium to be installed by the provincial government and the company subsequently re-jigged its plans for the short and long term, developing partnerships with companies other than Shoal Point Energy.
It has granted the company the ability to drill conventional oil wells onshore and offshore, continuing exploration work in the region.
As reported, Black Spruce Exploration has done deals with companies including Ptarmigan Energy, Enegi Oil and Deer Lake Oil and Gas, in addition to Shoal Point.
It is working to acquire Deer Lake Oil and Gas, in a deal expected to go to shareholder vote in early January.
Black Spruce Exploration has developed an office in Corner Brook and has been adding new hires to its ranks, with a geologist being the most recent addition.
The company’s first targets in the region will be in the Garden Hill field on the Port au Port Peninsula, accessible through its partnership with Enegi Oil.
“So the Garden Hill properties are conventional wells, so we’re going ahead and drilling those in March-April depending on how much snow we get. And that is a determining factor. Once the snow is disappeared, then we’ll start our drilling in that particular area,” Murray said.
The planned drilling program, he said, is a three-well program, with the potential for the addition of two more wells depending on preliminary results.
The company is also looking to drill an offshore well in the coming year, he said.
“We plan to drill a validating well there sometime this year,” he said, regarding the offshore licence area around the Port au Port, known as EL1116.
“That’ll probably be towards late summer or early fall, depending on how many wells we do or don’t drill at Garden Hill.”
While drilling conventional wells — without use of hydraulic fracturing — the company will still require regulatory approval, including environmental review and OK for any proposed work.