June 2000 Vol. 221 No. 6  International

Kurt S. Abraham,  International Editor

Canada makes a big splash at OTC

"Effervescent" might be a good word to describe the mood of a confident Canadian delegation that attended the Offshore Technology Conference in Houston last month. Indeed, provincial government leaders from Newfoundland, Nova Scotia and Alberta had much to be pleased about during their presentations at an OTC press briefing.

As they variously described the situation, Canada is thriving as a "stable" contributor to U.S. petroleum supplies. Canadian natural gas exports to the U.S. totaled a record 3.3 Tcf last year and now account for 15% of U.S. supplies, including output from the Sable project offshore Nova Scotia. Meanwhile, Canadian oil exports to the U.S. remained near record levels last year, at about 1.5 million bpd.

Growing U.S. hunger for gas – coupled with higher crude prices – has pushed Canadian drilling back to a frenzied pace. Drilling should jump 56% this year, to roughly 16,600 wells. The rosy picture is rounded out by news that Newfoundland’s reserve figures have been revised higher, while good exploratory results continue offshore Nova Scotia.

Newfoundland. The same day (May 2) that Newfoundland and Labrador Premier Brian Tobin addressed the OTC media, his province’s Department of Mines & Energy released a report that showed substantial upward revisions in reserve estimates. "I am pleased to report that 526 million bbl of additional recoverable oil, just over 1 Tcf of natural gas and 53 million bbl of recoverable NGLs have been added today to our petroleum resource inventory," said a beaming Tobin. "These significant revisions add to the combined (reserve) total, which is now 2.1 billion bbl of recoverable oil, 9.3 Tcf of natural gas and 413 million bbl of recoverable NGLs."

The new estimates reflect additional significant drilling that has taken place in the Jeanne d’Arc basin (see map) since the Canada-Newfoundland Offshore Petroleum Board issued its last set of estimates. That drilling includes 14 development wells at Hibernia oil field since 1997; a new oil discovery at West Bonne Bay in 1998; three successful delineation wells at White Rose oil/gas field in 1999; and two delineation wells on the Hebron-Ben Nevis complex in 1999.

Newfoundland’s Jeanne d’Arc basin is responsible for much of the province’s gain in oil and gas reserves.

Tobin said that Hibernia’s partners are likely to receive the production rate increase they requested – to 180,000 bopd from 100,000 bopd – now that a proposal is on the table to allay governmental concerns about losing royalties from the higher rate. In addition, Tobin said that Terra Nova oil field remains on schedule to achieve first oil (125,000 bpd) in spring 2001, utilizing an FPSO and six pre-drilled wells.

Nova Scotia. Three natural gas fields associated with the Sable Offshore Energy Project are now onstream, said Nova Scotian Premier Jon Hamm. Gas began flowing last December via the Maritimes Northeast Pipeline through Nova Scotia and on to New England. The flowrate should increase to more than 500 MMcfgd by the end of this year, said Hamm.

Meanwhile, the province now hosts more than a dozen oil companies. One of these, PanCanadian, "has made some very exciting discoveries in an area underneath its Panuke oil field," said Hamm. "The discovery well was drilled last year and flowed 55 MMcfgd. The second well at Deep Panuke flowed 52 MMcfgd." Hamm noted that PanCanadian has told investors that it hopes to prove out reserves at about 1 Tcf of natural gas. At press time, a third well was due to spud, and a fourth test was slated before the end of 2000.

Alberta. Not to be outdone by its maritime brethren, landlocked Alberta sent Minister of Economic Development Jon Havelock to Houston, to trumpet good news onshore. Havelock said that capital investment for E&P in the province should rebound to C$13.3 billion in 2000, with drilling expected to jump to 16,566 wells, versus 10,608 in 1999. In fact, Alberta drilling set a record in February 2000, when 412 rigs were working. This month, Calgary hosts the bi-annual National Petroleum Show and the tri-annual World Petroleum Congress. These should attract 1,400 exhibitors, 50,000 visitors, and 3,000 delegates. Alberta contributes 69% of all energy produced in Canada.

Miscellaneous Canadian notes. In British Columbia, independent exploration firm Den-Mara Enterprises paid a record C$13.7 million for a drilling lease in the province’s gas-rich northeastern region. Provincial Energy Minister Dan Miller said the cash outlay "demonstrates the industry’s ongoing interest" in developing the northern gas reserves.

Meanwhile, Petro-Canada has abandoned previous plans to become a major international oil player, in favor of concentrating on what it feels will be richer returns from a portfolio of assets at home. Petro-Canada President Ron Brenneman said the firm will focus on gas production and oil sands development in western Canada, as well as East Coast oil operations. Accordingly, the company will sell stakes in Veslefrikk and Njord oil fields offshore Norway, while taking a wait-and-see attitude on its Algerian gas project.