Anyone who says there are no more giant oil fields waiting to be found hasn’t reckoned with Newfoundland and Labrador. This wildly underexplored region has had numerous technical and regulatory issues that have prevented widespread exploration. But a recently conducted integrated study, along with technological improvements and a revised regulatory regime, might change that scenario.

The resource assessment study, commissioned by Nalcor Energy to BeicipFranlab, indicates the potential for 12 Bbbl of oil and 3.2 Tcm (113 Tcf) of gas for just the 11 blocks that were offered in the 2015 licensing round. In a statement released Oct. 1, the Honorable Paul Davis, premier of Newfoundland and Labrador, said, “This is a momentous day for the future of Newfoundland and Labrador’s oil and gas industry—we clearly know that there is more oil and gas waiting to be discovered and developed. Through this information, we know more about our resource potential than we ever have before. For the first time, detailed oil and gas resource numbers will be released in advance of a license round closing, providing a fair and level playing field for the global industry prior to bidding in the license rounds.”

Already the region is known for some major discoveries. Statoil, for instance, with Husky as a 35% partner, has discovered Bay du Nord, with an estimated 300 MMbbl to 600 MMbbl of recoverable oil; Mizzen, with 100 MMbbl to 200 MMbbl of recoverable oil; and Harpoon, which is currently under evaluation. Statoil also is drilling its Cupid prospect and was scheduled to spud its Bay d’Espoir well on Sept. 13. The company is planning to finish drilling the well after the Nov. 12 bid round announcement.

In 2011 Nalcor embarked on an ambitious 2-D seismic survey with TGS and PGS and has now acquired a little more than 100,000 line km (60,000 line miles). The area extends from the tip of Labrador out to the Canada/Greenland border and south toward the Flemish Pass region. It’s since been extended toward Nova Scotia. Controlled-source electromagnetics (CSEM) also is playing a role, and EMGS has acquired data over the area showing resistivity anomalies that align well with the seismic results.

“A lot of these areas didn’t have data on them previously to understand such basic questions as ‘Where are the basins?’” said Richard Wright, manager of exploration for Nalcor Energy Oil and Gas. “If you think about the North Sea, these were questions that were answered in the late ’60s and ’70s. We’re now getting to a lot of these areas. It’s good because we’ve got some great technology to do it.”

So where has this region been all of our lives? “If you look back to the ’70s and early ’80s, we were keeping pace in terms of data acquisition with Norway,” Wright said. “In the early ’80s when the oil price collapsed, a lot of investment came out of frontier areas like ours, and it took a long time to come back.”

He outlined a few snags along the way. For one thing, the federal government of Canada was negotiating with the province over offshore rights. This was finally settled in 1985. Additionally, other legislation in Canada made it difficult to get seismic vessels into the area, and that wasn’t settled until 2011.

“We’ve seen the amount of seismic activity increase appreciably over the last few years as a result of that,” he said. “Last year saw the most 2-D seismic acquired since 1983.”

Finally, the areas that are the subject of the recent study are slope and deepwater areas, which weren’t a major focus in earlier decades because the technology hadn’t yet matured to develop them. “It’s early days for that, and there’s a lot of area to look at,” he said.

Licensing
Wright said that the province had recently changed its licensing procedure, and the plan is to conduct additional resource assessment studies prior to each subsequent round. Areas with widespread activity will hold licensing rounds every two years, and frontier areas will be offered every four years.

“That allows us to gather data over the area subject to the licensing round and do resource assessments,” he said. “It also allows oil and gas companies to plan their budgets and their people. They know that if they make investments in Newfoundland and Labrador in terms of people and budgets, there will be work to do for a very long time because of the size of the area.” He added that each licensing round only covers 2% of the province’s total offshore area—an area totaling 1.8 million sq km (695,000 sq miles).

The Study
Wright said the methodology for the study was “unprecedented for offshore Newfoundland and Labrador.” “We’re taking the detailed seismic data and other data that have been acquired prior to the license round and using them in the final year prior to bid closing to do detailed resource assessments,” he said. “BeicipFranlab created a 3-D basin model for the entire region.”

This has been simulated through time, so explorers can take layers from the Jurassic and Cretaceous; bury them through time; and look at the thermal maturity, geochemical properties, total organic carbon, etc., to determine which areas are most favorable for oil and gas accumulations. Wright understands that some regions might have more prospectivity than
others.

“Our goal is to make sure we have an objective understanding of what’s in the offshore and do it in this piecewise way to get a highly deterministic answer,” he said. “This is mapping from the leads and prospects up as opposed to making broad statistical estimates of how many fields may be in a large area. We’re counting features from the seismic data.”

And for explorers who are leery of the harsh conditions in the area, Nalcor has done an 80,000-page metocean study examining the area. It’s in a map-based format and breaks the region into grids. There are 400 grids, and each has a 200-page report studying seven conditions in the offshore, including wind, waves, sea ice, current and icebergs.

“For every grid there’s a quantitative ranking of how that grid cell, in terms of harshness or waves or wind, ranks against the Jeanne d’Arc Basin, where we’ve had production for 17 years; the Flemish Pass area, which is where we had the Statoil Bay du Nord discovery; and other areas like the North Sea, the Barents Sea, east and west Greenland, Sakhalin Island, the Caspian, all of those areas. Companies that are looking at the area have a quantitative piece of work that they can assess on a metocean perspective to assist the industry with making future exploration and development decisions, such as facility design for the area.”

For companies that can stomach harsh environments, the prize is potentially huge. And Nalcor has done most of their homework for them.

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