Statoil, Husky drill dry wells off Newfoundland and Labrador

14 July 2017, Week 27, Issue 466

Statoil and partner Husky Energy have drilled two dry wells in the Flemish Pass Basin off the coast of the Canadian province of Newfoundland and Labrador.

The companies drilled two test wells earlier this year in the Flemish Pass, an undersea geological basin located roughly 500 km east of St John’s. The unsuccessful effort raises questions about additional drilling near Statoil’s Bay du Nord discovery.

“These results are disappointing, as we had hoped to add additional optionality to the near-field area at Bay du Nord,” Statoil’s head of exploration in Canada, Trond Jacobsen, said in a statement.

Jacobsen added that the tests “did not result in the discovery of hydrocarbons”.

Husky, one of Canada’s largest oil and gas companies, has declined to comment on the results, but has pledged to continue working with the Norwegian firm on development options for Bay du Nord.

The discovery of an estimated 300-600 million barrels of recoverable oil in place (OIP) at Bay du Nord in 2013 caused considerable excitement in Atlantic Canada’s offshore energy industry, raising expectations of a major boost in activity following some lean years. The initial reserve estimates were moved to the lower end of this range, though, after a drilling programme that lasted almost two years. However, the area’s prospects have remained comparatively bright.

Statoil’s statement said the volume estimates for Bay du Nord, including the Bay de Verde and Baccalieu discoveries announced in 2016, remained at around 300 million barrels of recoverable oil. But Statoil has not committed to full-scale development in the area, though its company statement said it was continuing to evaluate the feasibility of a development at Bay du Nord.

Statoil sharpened its focus on offshore Atlantic Canada after selling off its Alberta oil sands assets as part of a cost-reduction effort. Bay du Nord is considered likely to receive a major share of any increased Statoil investment offshore Newfoundland and Labrador.

Earlier this year, news of Statoil and Husky’s plan to drill the two exploratory wells in the Flemish Pass Basin also buoyed spirits within the province’s offshore energy industry and provincial government. A Husky spokeswoman told CBC that Statoil drilling projects offshore Newfoundland and Labrador had typically generated 500 jobs apiece, including spinoff jobs throughout the industry.

The spokeswoman’s warning that it was too early to speculate on whether the amount of oil present in the Flemish Pass Basin had turned out to be fortuitous. But Statoil and Husky’s lack of success may prove to be beneficial over the long term.

According to CBC, development in the Flemish Pass Basin would pose significant challenges not faced elsewhere in Newfoundland and Labrador’s offshore region. The broadcaster noted that the water depth in the basin exceeds 1,000 metres, compared with 100-150 metres in the Jeanne d’Arc Basin.

Statoil has maintained a presence offshore Newfoundland and Labrador since 1996. The company has said it is encouraged by Flemish Pass geology because it is similar to that on the Norwegian Continental Shelf (NCS).


Edited by

Anna Kachkova


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