Challenges ahead as N.L. goes farther, deeper for oil

Province’s offshore oil industry can learn from international experiences

Ashley Fitzpatrick
Published on June 20, 2014
Erling Kvadsheim, director, environment and industry policy, Norwegian Oil & Gas Assoc., speaks at the Noia conference in St. John’s Thursday.
— Photo by Keith Gosse/The Telegram

Newfoundland and Labrador’s offshore oil sector has a new regime for issuing exploration licences and new seismic data — all applauded as potentially spurring fresh exploration commitments from oil companies.

But looking to the future, an emerging question is how far out and how deep will exploration and development go before the challenges, and expenses, become too great?

The province has seen international recognition for its exploration success in recent years, with a trio of oil discoveries by Statoil drilling in the frontier Flemish Pass Basin, about 500 kilometres northeast of St. John’s — far from the area of the Jeanne d’Arc Basin where current oil producers like Hibernia, White Rose and Terra Nova are found.

At the Noia oil industry conference at the St. John’s Convention Centre Thursday, Kieran Kavanagh, an offshore technology and engineering expert with Wood Group Kenny, said the province’s industry is also looking at deeper waters.

“We’re at a stage in East Coast Canada where we’re evolving towards a step-change from (continental) shelf technology, to off-the-shelf technology, from 80 to 100 metres water depth, to something much deeper,” he said.

“Orphan Basin is going close to 3,000 metres. That’s really coming close to the deepest (wells) ever done anywhere. So certainly we’ll be out at the frontier of technology when we develop in that area,” he said, noting the potential upside of an industry faced with going farther, deeper.

While issues have been handled to date, he said solutions found to challenges arising — from safety services to ice management to oil spill response — will be of value to companies facing similar challenges elsewhere in the world.

On keeping local costs down, he said this area has had the benefit of seeing relevant technology developed and deployed in other regions. And innovation, research and development work here may yet provide new solutions and cost-savers.

“If we spend some R&D commitment money here in Atlantic Canada, then that can benefit outside of Atlantic Canada. It can benefit the U.S. Beaufort Sea, the Canadian Beaufort Sea ... so there’s certainly an opportunity to see research dollars here benefitting other sectors,” he said.

The director of environment and industry policy for the Norwegian Oil and Gas Association, Erling Kvadsheim said Norway has been dealing with a challenge relating to the reach of search and rescue services.

“Distance is very important because the helicopters, they only have a certain range. Now the exploration (that) is going on, on the Northern part of the Norwegian shelf, is now getting close to the limit where you can safely have search and rescue helicopters from shore. So that is an issue that needs to be sort of resolved,” he said, noting several potential solutions have been identified.

Another, local example was offered by Derek Scott, vice-president of program development with Provincial Aerospace. “What we are finding is ... the oil industry is the industry that’s challenging us the hardest. For example, the exploration that’s occurring right now in the Flemish Pass. Our (usual) aircraft provide support, they’re still very effective, but again you’re kind of on the outer range in which the missions can be effective,” he said.

He said the company is already looking at ways of meeting even greater range requirements.

So far, companies in Newfoundland and Labrador have handled Flemish Pass and Orphan Basin exploration without incident, under the regulatory supervision of the Canada-Newfoundland and Labrador Offshore Petroleum Board.

Taking questions for local industry members at the conference, Chevron Canada president Jeff Lehrmann was asked about the deepwater Orphan Basin and three wells drilled by the company there, including one last summer. The drilling was, he said, completed “incident-free” in terms of safety, on budget and on schedule, even if the company was ultimately “disappointed with the subsurface results.”