East Canada’s upstream sector hits its next phase
Activity offshore East Canada continues to move along, buoyed by attractive resources and an improving oil price outlook. Accordingly, the latest mega-project is underway, and the provincial government continues to identify new propsects and attract additional operators. There is certainly reason for optimism.
“The future of the Newfoundland and Labrador (NL) oil and gas industry is bright, with potentially over 37 Bbbl of oil available and seven new entrants into the industry in the last two years,” notes Charlene Johnson (Fig. 1), CEO of the Newfoundland & Labrador Oil & Gas Industries Association (Noia). “We have also had over C$2.5 billion in new work commitments made in the past three years. Our prospectivity is unmatched throughout the world, and our supply and service sector is experienced and looking forward to unlocking this potential.”
NL: EXPLORATION
It’s been a busy year already for provincial firm Nalcor Energy, as it continues to coordinate NL’s exploration effort. As part of its campaign since 2011 to document and delineate prospects across all of NL’s extensive offshore acreage, Nalcor has conducted annual seismic shoots to collect data, much of which goes into supporting the province’s annual licensing rounds.
Working with seismic partners TGS and PGS, Nalcor collected 9,100 km2 of 3D seismic data and 20,000 line km of 2D in 2017, for a total of over 170,000 line km of 2D seismic data collected to date. Nalcor also has partnered with Fugro to acquire approximately 10,000 km2 of multi-beam bathymetry and seabed cores in the upcoming license round areas. This information is now being shared with the global industry, in advance of the upcoming Call for Bids.
“By leading exploration activity in the early stages of the exploration cycle and providing extensive information about our offshore resources, we are opening new areas for industry exploration and potential future development for our province,” noted Nalcor Executive V.P. for Offshore Development and Corporate Services Jim Keating.
There is tremendous potential in NL’s offshore. To put it in context from a geographical perspective, NL’s offshore area is one-and-a-half times the size of the Gulf of Mexico. Compared to other oil and gas jurisdictions like the UK and Norway, NL’s offshore resources remain largely unexplored. Less than 7% of the 1.8-million-km2 of offshore area have been licensed, creating frontier opportunities for exploration and future development.
To date, independent resource assessments, conducted by Beicip Franlab, have identified an in-place potential of 37.5 Bbbl of oil and 133.6 Tcf of gas in just two areas that make up less than 5% of the province’s offshore area. “We are currently working with Beicip to release a new resource assessment in advance of the November’s license round, based on last year’s work,” said Keating. “We expect to release the detailed assessment in the third quarter.”
One example of the results yielded by the multi-year seismic effort is identification of the Cape Freels prospect in the West Orphan basin, 300 km off the NL coast. “This is one of the largest undrilled prospects in the world,” enthused Keating. The prospect was included in the 2016 License round and resulted in BP, Hess, Noble, Navitas and Delek bidding $461 million in work commitments for parcels in the area.
“The seismic program undertaken by Nalcor Energy has greatly reduced risk and provided important data for companies interested in the NL offshore,” said Noia’s Johnson. “This data, achieved through one of the largest seismic programs in the world, has generated significant interest. We look forward to continuation of this seismic work and the interest it generates throughout the world.”
For 2018, the C-NLOPB has issued Calls for Bids for exploration licenses in the Eastern Newfoundland and Jeanne d’Arc regions, as well as a Call for Bids for a production license, in the Jeanne d’Arc area. The NL18-CFB01 grouping (Eastern Newfoundland) consists of 16 parcels and 3,941,046 hectares, Fig. 3. The NL18- CFB02 offering ( Jeanne d’Arc area) is just one parcel and 142,448 hectares. Finally, the production license, NL18-CFB03, ( Jeanne d’Arc area) has one parcel and 1,423 hectares. “Nov. 7 is the date that has been set for awarding parcels in the 2018 licensing round,” said Keating.
Exploration drilling. The proof that Nalcor’s seismic and prospect identification campaign is fulfilling its mission can be seen in the attraction of new operators to NL’s offshore sector. “We have gained seven new entrants in just the last two years,” said Keating. “One of the leaders among the new operators is BP. They filed their drilling plans last fall and could begin as early as 2019.”
Meanwhile, Husky Energy announced on May 18 a significant discovery offshore Newfoundland, about 6 mi north of the SeaRose FPSO vessel. Husky said the White Rose A-24 exploration well hit more than 279 ft of oil-bearing sandstone.
NL: DEVELOPMENT
While fill-in and maintenance work continues at Newfoundland’s existing fields—Hibernia, Terra Nova, White Rose and Hebron—the focus is now on Husky’s West White Rose field extension project.
Meanwhile, last fall’s controversy about federal changes to the environmental assessment process seems to have achieved a more reasonable debate among the various parties. “We do have some potential challenges with respect to environmental regulation changes, and we have been making representation to the federal government on these matters,” said Noia’s Johnson. “We are optimistic that a process will result, which is beneficial to all Canadians and ensures that exploration, development, and production can occur in a timely manner.”
West White Rose. The West White Rose field extension started construction in late 2017, and the platform should begin operating in 2022. It is anticipated to achieve a gross peak production rate of about 75,000 bopd in 2025 from a large, fixed platform, Fig. 4.
While the West White Rose project is nearly as large as the original White Rose field development, there are some noticeable differences in the two designs. The West White Rose platform will be a concrete gravity structure (CGS) with a fixed drilling rig that produces back to the SeaRose FPSO at the existing White Rose field complex. The West White Rose platform will take advantage of existing field infrastructure, with oil processing and storage handled by the SeaRose FPSO. The original White Rose field was developed using mobile offshore drilling units to drill wells, with the SeaRose handling processing and storage.
Last August, a general partnership between SNC-Lavalin, Dragados Canada and Pennecon (SDP) was awarded a construction contract from Husky for West White Rose, primarily to build the CGS. Construction of the CGS has begun at the graving dock in the port of Argentia, Fig. 5. The CGS will eventually be mated to the platform module. The graving dock was kept in a safe and dry state during project deferral, but to get it ready for CGS construction, there was a fair bit of infrastructure installation to be done. The main contractor, SDP, has been installing offices, electrical and other infrastructure required for the construction phase. Some of this infrastructure also included the concrete batch plants that will be used, as well as the tower cranes.
In addition to SDP being the main CGS contractor, the living quarters are being constructed in Marystown by Kiewit Offshore. The subsea tie-in work has been awarded to TechnipFMC, and the CGS tow out and installation have been awarded to Kvaerner Canada Ltd. Several contracts for other topsides components are yet to be awarded. A full listing of contracts awarded can be found at wwrp.huskyenergy.com
NL: COMPANY PROFILES
Several companies are playing key roles in East Canada’s offshore sector. What follows are key details of their activities.
Fugro. Since the early 1990s, Fugro has been heavily involved in East Canada’s resource sectors. “In fact, one of the first projects that comes to mind is the marine and terrestrial mapping of the Voisey’s Bay, Vale, mining project, in a remote region of Labrador,” said Dr. Stephanie Ingle, Fugro’s Geology and Geophysics Performance Champion. And now, the firm’s most recent involvement is the Nalcor Marine Seeps Project, a partnership between Fugro and Amplified Geochemical Imaging (AGI), with investment by provincial firm Nalcor Energy, to acquire exploration data for offshore Newfoundland and Labrador.
The data acquired include geophysical survey information, heat flow probe measurements, and geochemical data that are licensed to clients interested in exploring the area. It is intended to be a renewing project, designed and coordinated to provide exploration information in advance of offshore leasing rounds for clients, particularly in advance of the 2018 bidding round.
The sea-based work scope, carried out by Fugro, covered an area of 11,070 km2, acquired 99 cores for geochemical sampling and investigation, and analyzed approximately 550 shipboard samples for hydrocarbon geochemistry, Fig. 6. Heat flow measurements were acquired at 11 distributed locations, with two measurements taken per location; these data are a significant improvement on the pre-existing three heat flow measurements along the periphery of the Orphan basin, and should vastly improve the robustness of basin models. AGI performed the shore-based geochemical work, using their patented ultra-sensitive analytical method.The different geochemical datasets (i.e. shipboard, conventional shore-based, & AGI adsorbent-based analyses) all suggest the presence of thermogenic hydrocarbons. “The project went well and the results are interesting,” said Ingle. “There appears to be evidence for both a condensate and an oil signature in the region.”
The resulting data package and comprehensive, integrated interpretive report have since been made available. Fugro and AGI report that they have had success selling licenses for these data covering the frontier region of the Orphan basin. As this issue went to press, Fugro and AGI were in discussions with Nalcor, regarding the 2018 NL seismic survey plan.
The Cahill Group of Companies—building beyond. This company’s Fabrication operation, one of three divisions, specializes in piping, structural steel, HVAC, and assembly services. It offers multiple facilities and diverse solutions for industrial, institutional, and heavy commercial markets, including complex subsea structures and exotic pipe. This division recently completed work on the Hebron field development, offshore Newfoundland, Fig. 7.
Vice President Kim Keating, who, in addition to running the Fabrication Division, is responsible for its Technical Division as well as the West and Central portions of the Construction Division. “So, what I’m trying to do,” said Keating, “is embrace a culture of innovation across all my divisions; ensuring we have the right leadership focused on driving market relevance, execution certainty and overall value to our clients. I am fortunate to be building on significant investment in equipment and technology made by our president, Fred Cahill, and am now looking to leverage this to offer novel solutions to our clients”.
Since work ended on the Hebron project, Cahill’s Fabrication Division has had to be more resourceful in obtaining work, but Keating is not deterred. “We have been focused on driving down costs through lean management initiatives and productivity gains while maintaining our strong track record of safety and quality performance,” she explained. “We are building stronger client relationships while also seeking strategic partnerships, acquisitions and export opportunities, working with companies like TechnipFMC—we recently got on their global supplier list. We remain committed to supporting the East Coast oil-and-gas offshore operations and played a key role in supporting the startup operations for the Hebron project. We do a lot of short-term, quick-turnaround work for the offshore, and we’ve been successful in keeping a steady level of activity.”
In addition to building a one-of-a-kind living quarters for the Hebron platform, Cahill, in partnership with Wood Group (now Wood), also successfully completed the Hebron hook-up and commissioning scope of work, which the company hopes positions them well for future opportunities. “We’re looking to be a valued partner, as we continue to grow our presence across Canada— we are building the future of oil and gas, mining, hydro, and social infrastructure on some of the largest projects in the country,” said Keating. “I feel like we’re just scratching the surface on our capabilities and our drive for value. Whether it’s fabrication or construction or technical, we are investing time and money into finding those markets where it makes sense for us to play, offering a one-stop shop of service and product offerings”.
“As we all know the oil and gas industry is changing rapidly,” added Keating. “New technologies, new contracting models, new regional development policies and new competitors are creating a future very different from the past. In this rapidly changing environment, we must embrace innovation and lead our sector in the development of new ways of doing business. By the same token, it requires real collaboration and partnerships to realize the aspirational goals of Advance 2030. We all have to work together, to shorten that timeframe from prospectivity to development, to realize our future offshore potential.”
Pennecon. As a nationwide company with headquarters in St. John’s, Pennecon is involved with the West White Rose Project as part of the SNC-Lavalin- Dragados-Pennecon General Partnership (SDP). The project, as noted earlier in this article, features a fixed drilling platform that includes a concrete gravity structure (CGS) being constructed by SDP, Fig. 8.
Pennecon brings a wealth of offshore experience and capabilities to the project. The firm began about 50 years ago as a small paving company, with operations localized on NL’s Avalon Peninsula. Today, the firm has four main divisions—Heavy Civil, Industrial, Services & Maintenance, and Marine, which offer a variety of services specific to the offshore industry, including new project construction/development; mechanical and electrical construction; hydraulics services; crane services; maintenance services; and field and offshore services. Additionally Pennecon’s 16-acre marine base is the closest ice-free, deepwater port to NL’s major oil fields, offering a variety of services. These range from mobilization and discharging cargo, to repairs and upgrades of ocean-going vessels and offshore drilling rigs.
The company has been involved with all of Newfoundland’s four previous mega-projects. Along with partner Kenonic Controls, Pennecon provided commissioning and ongoing onshore/offshore support services for the Hibernia platform for 20+ years. Additionally, during Hibernia’s OLS replacement project, the Pennecon marine base was the onshore supply/mobilization base for the project’s vessels. At Terra Nova, the company’s hydraulics team worked on the main tasks associated with the FPSO’s hydraulic maintenance contract, which include onshore workshop repairs for components; scheduled offshore maintenance campaigns; and providing hydraulic consultancy for upgrades. As well, during the FPSO Riser and Flowline Replacement Project, Pennecon’s marine base offered 24-hour activity support.
During the Hebron project, the company worked on a variety of contracts. Highlights included the Pier and Quay Remediation at the Bull Arm Construction site. Additionally, Pennecon offered services and equipment to Fagioli Canada during installation of the Hebron Topsides modules. The bulk of this work involved the handling, assembling and disassembling of approximately 10,000 tonnes of highly specialized equipment, which was used to lift and transport various modules. The firm also did work for Hebron’s GBS deck fabrication, including 7 km of welding and 415 km of piping installation.
DF Barnes. Since we last mentioned DF Barnes in our December 2017 issue (p. 54), the firm has expanded internationally. Known for its construction and fabrication work in Newfoundland’s offshore industry, the firm announced on April 17 that it had bought Scotland’s BurntIsland Fabrications, also known as BiFab. Over the last 25 years, BiFab has been a significant player in UK offshore oil and gas sector. And, in recent years, the company has been involved in renewable energy by building large jackets for wind turbines that are used in offshore wind farms.
The BiFab deal is the first acquisition outside Canada made by DF Barnes. “We’ve been looking for acquisition possibilities for some time, and we had been looking at the North Sea,” said Sean Power, vice president for development at DF Barnes. “And while North Sea production is down, there’s still a lot of opportunities left there. So, we found BiFab, which has 25 years of building offshore platforms, but what was equally attractive was that they have seven to eight years of building jackets for offshore wind farms. We thought that was a very good fit. We’re pretty excited about this deal. We’ve been working on it for about two years”
Power said that BiFab, at its peak when working on a large project, has about 1,300 to 1,400 active workers, spread across three fabrication sites in Methil, Burnt Island and Arnish in Scotland. “However, they’re just on the back side of a project, so that total is down some. But we expect that number to be back up by the end of the year.”
Given the long history of DF Barnes in the offshore oil and gas industry, some people were a bit concerned that the BiFab acquisition might signal a shift in focus by the company toward renewables and away from hydrocarbons. But the firm insists that its commitment toward oil and gas projects remains rock-solid. “That’s correct, we’re not diminishing our presence in oil and gas, because the Newfoundland and Labrador sector continues to grow,” said Power.
NL: ADVANCE 2030
On Feb. 19, 2018, Newfoundland and Labrador Premier Dwight Ball, and provincial Minister of Natural Resources Siobhan Coady, were joined by members of the Oil and Gas Industry Development Council to release Advance 2030—a plan for growth in the NL oil and gas industry.
As part of The Way Forward, the provincial government committed to work with the industry to position the NL province globally as a preferred location for oil and gas development. As part of that commitment, the Oil and Gas Industry Development Council was established to create a long-term vision and plan for the province’s industry. Government officials have accepted the 17 focus areas recommended by the council, which require immediate, mid-term and long-term actions. By working collaboratively, the provincial government envisions by 2030:
- More than 100 new exploration wells will be drilled;
- NL will have multiple productive basins that produce over 650,000 boed;
- A shortened timeframe
- Direct employment of more than 7,500 people in operations;
- A robust service-and-supply sector;
- Commercial gas production;
- Renewables and oil and gas integrated into a world-class energy cluster.
Advance 2030 is available online at www.nr.gov.nl.ca/nr/advance30.
NL: OCEAN SUPERCLUSTER
On Feb. 15, 2018, the Canadian government announced its C$950-million Innovation Superclusters Initiative. This investment, which will be matched dollar-for-dollar by the private sector, is expected to create more than 50,000 middle-class jobs and grow Canada’s economy by $50 billion over the next 10 years.
During 2017, the federal government challenged Canadian businesses to collaborate with other innovation actors, including post-secondary and research institutions, to propose bold and ambitious strategies that would transform regional economies and develop job-creating superclusters of innovation. Accordingly, five superclusters, representing differing industries and various economic sectors, have been created, including the Ocean Supercluster, based in Atlantic Canada.
The Ocean Supercluster will harness emerging technologies to strengthen Canada’s ocean industries—including marine renewable energy, fisheries, aquaculture, oil and gas, defense, shipbuilding and transportation.
NOVA SCOTIA
After a fallow period exacerbated by the industry downturn, Nova Scotia’s offshore sector is showing some life again. As this issue was being prepared, BP was in the middle of drilling its long-awaited first wildcat offshore the province.
Approximately 330 km offshore Nova Scotia, BP began drilling its Aspy D-11 exploration well during April 2018, Fig. 9. BP holds a 50% interest in the license and is the operator of the exploration program. Hess Canada holds the remaining 50% interest. The well is being drilled by the West Aquarius semisubmersible in a 2,777-m water depth.
The well has been through the regulatory wringer, as its spudding came only after a three-year approval process. CNSOPB approvals were finally granted in April 2018, and BP began drilling shortly thereafter.
Editor’s note: This article is part of a series assembled and published by World Oil in partnership with the federal government of Canada, through its Atlantic Canada Opportunities Agency (ACOA). 
- Advancing offshore decarbonization through electrification of FPSOs (March 2024)
- Subsea technology- Corrosion monitoring: From failure to success (February 2024)
- Prices and governmental policies combine to stymie Canadian upstream growth (February 2024)
- U.S. producing gas wells increase despite low prices (February 2024)
- U.S. drilling: More of the same expected (February 2024)
- U.S. oil and natural gas production hits record highs (February 2024)
