World Oil: How would you characterize the state of Newfoundland and Labrador’s upstream sector?
Minister Coady: What we’re seeing is that the downturn certainly does have effect—it did have effect in terms of the overall global industry. But here in Newfoundland and Labrador (NL), I’ll give you some understanding of where we sit as a province, and why I’m optimistic. In the last number of years, we’ve really seen an increase in the interest and activity offshore NL. So, while you’re asking me the state of the upstream industry, I’m going to say optimistic, and I will back that up with some statistics. For the last couple of years, we’ve had a commitment of about C$3 billion in exploration activity coming from our land tenure. So, we know that there’s an interest in what’s happening offshore NL. In the last year, alone, we’ve had seven new entrants offshore NL—Anadarko, BP, Hess, Noble, Navitas Petroleum Canada (Delek), Nexen and Total. So, seven new entrants. And they are joined with some of the biggest players in the world that are here, and have been here, and successfully here for quite some time.
As you know, in December 2016, we celebrated the 1-billionth barrel of production from Hibernia field. And estimates now are at 1.7 Bbbl of ultimate output, and my feeling is we could go beyond that. We’re 20 years now, producing offshore NL. So, when you ask me to characterize the state of play in NL, I would say optimistic, attracting attention globally, and I think that will continue. We’ve seen a tremendous amount of new 3D seismic acquisition programs this summer; three 3D vessels with four surveys underway. And we’re continuing our 2D seismic work in preparation for future land tenure. So, we know that there are about 20 basins, and we’re active in just one. We know there are discoveries in the Flemish Pass with Statoil. And we know that in the West Orphan basin there was a great uptake, and that’s why we had so many new entrants. And operators see the opportunity with 350 leads and prospects, So, you can see why I’m optimistic.
WO: What is your 12-month outlook for the offshore sector, and do you see activity picking up?
Minister Coady: Well, as I said, we’ve had three 3D vessels, four 3D surveys this year, which is the first step in a building block of exploration activity. So, the analysis will be taken on that 3D seismic activity to determine further exploration. We know from the work that the province has done through Nalcor on some of the surveys that the independently verified opportunity, the prospectivity, is quite something.
What we’re seeing through the seismic activity, and building on that the new entrants, is an exploration program that will yield results. We are also consumed with ensuring our competitiveness as a province, and we have an Oil & Gas Council that is doing a longer-term plan on development of the oil and gas industry. We also have a separate table with the federal government on competitiveness.
So, when I marry new entrants and interest in the license round, I stack that with seismic data and early results that we’re seeing, and I put on top of that our drive toward ensuring our competitiveness. All of that, to me, makes a pretty good picture for the future of the industry in this province.
WO: What are your and the provincial government’s longer-term goals for the offshore sector?
Minister Coady: Definitely, our Oil & Gas Council is looking at the future of the industry, long term. And when I look at the medium-to-longer term, I look at continuous improvement and innovations in the industry, and what role do we, in this part of the world, play in that. We know that integrated operations will be something that the industry is looking for, to help drive down costs. So, how can we ensure an attractive environment? How do we ensure a good digital strategy? This is the future of oil and gas—extraction will be a little different in the future. We look at making sure that we are prepared for, and in front of, these new advances in the extractive industries.
We’re also looking at doing more in gas. The province already has had gas discoveries. Some of the 2D and 3D seismic is showing more opportunity there. Also, keeping on that forefront, we’re seeing the integration of renewables. So, we’re looking at starting the conversation about how we marry or integrate oil and gas with renewables.
WO: The province has promulgated a very active exploration program. Do you think the level that we’ve already seen will continue for the next three to five years?
Minister Coady: I don’t see any stop to that, at this time. We have a land tenure system that we’re actively moving through. We have to maintain our competitiveness, to ensure that we are attracting the right players. I think the global industry is looking at this as a great opportunity, an environment that is attractive to them. Their success is our success—we want them to operate here. Another thing that I want to emphasize is that we also have a maturing industry, with people that have the skills, technology, business environment, and innovation needed, and I think that’s critical. Companies in NL are now presenting themselves globally, and all of that speaks to a vibrant future.
WO: In NL, there hasn’t been all that much exploratory drilling in the last several years, some of that governed by oil prices. Is there something else that the provincial government can do to increase the level of exploratory drilling?
Minister Coady: I mentioned earlier two forms of competitiveness—and I think that what falls under our effort to ensure competitiveness is ensuring robust exploration activity. And we have a roundtable with the federal government, as well as one with the Oil & Gas Council, on this competitiveness. One of the things for consideration is how do we entice, induce and leverage opportunity for exploration.
WO: What do you see as additional development opportunities on the horizon?
Minister Coady: There are two areas. One is in subsea tiebacks—how do we ensure that we do the tie-backs properly and maximize the yields? I think that’s a great opportunity. And then there’s other basin development. At Flemish Pass, Statoil, of course, has made a significant discovery. They’ve done additional work in that area and are assessing their resource, what it looks like, and making their plans going forward. We’re hopeful that they’ll see an opportunity there. On top of that, there are the opportunities with West White Rose. There is a lot of excitement, with 3D seismic underway. One of the things that I’ve said quite seriously, is that we have to reduce our time from prospectivity to production. So, with all the 2D and 3D activity enticing people like Noble and Hess, you could, upon analysis of the results of those surveys, move very quickly into exploration and then move very quickly into production. And that’s what we’re looking at—how do we ensure that we can move very quickly into production. All that being said, we also have to have the regulatory structures to allow things to move rather quickly. So, for example, on the environmental assessment side, timing is of critical importance, to ensuring that you can move quickly. And we’re working with the federal government on ensuring the least time between prospectivity and production.
WO: Many people in Newfoundland and Labrador are concerned about the future of the Bull Arm fabrication facility. What are some possibilities for its future use?
Minister Coady: You may be aware that an expression of interest (EOI) was let this past Spring. A number of people came forward and gave their views on what can be developed, what can be done. Now, based on the EOIs and discussions that have occurred over the summer with proponents, Nalcor has released a request for proposals. So, there was enough substance to the EOI, to move to a request for proposals. You will see, coming out of that request, a few very serious potential opportunities for the Bull Arm site. So, I am optimistic that this site will be fully utilized. We’re maturing as an oil and gas location, and I think that’s helpful. Bull Arm is a world class site, so how do you maximize that use, and leverage that opportunity for North America?
WO: The local service/supply sector has been very good about spawning new niche firms over the years. Does any kind of program exist to foster additional development of your local service/supply industry?
Minister Coady: As part of the West White Rose benefits, we’ve negotiated a C$60-million fund for innovation and business development. The Department of Natural Resources is now developing the guidelines around that. The idea here is utilizing those funds for innovation, infrastructure, and business development opportunities. So, we’ll be leveraging those funds to ensure that we have the service and supply chain that is of benefit to our offshore and is of benefit globally. 
- Coiled tubing drilling’s role in the energy transition (March 2024)
- Advancing offshore decarbonization through electrification of FPSOs (March 2024)
- What's new in production (February 2024)
- Subsea technology- Corrosion monitoring: From failure to success (February 2024)
- Digital tool kit enhances real-time decision-making to improve drilling efficiency and performance (February 2024)
- E&P outside the U.S. maintains a disciplined pace (February 2024)
