Twice the size of Hibernia? Oil companies being teased with 'Son of Cape Freels'
Prospect called Raleigh is a 'big one,' says Nalcor VP Jim Keating
Oil companies with an interest in exploring Newfoundland and Labrador's offshore are being teased with a "monster-type" prospect that could be twice the size of Hibernia.
Nalcor Energy, the provincial oil and gas Crown corporation, has unveiled what it calls "Raleigh" ahead of this year's licensing round, which will see companies bid for exploration rights in the offshore.
"Yes, it's a big one or else it wouldn't make the Top 10 list at Nalcor," Jim Keating, vice-president of Nalcor's oil and gas division, told delegates this week at the annual Noia oil and gas conference in St. John's.
Natural Resources Minister Siobhan Coady said the true potential of the new find is still being analyzed, "but what we're seeing is certainly promising."
Raleigh is a 'stacked' prospect
The prospect was discovered in the Orphan Basin during Nalcor's ongoing geoscience program, which includes seismic exploration and other surveys of the parcels up for bids in November.
Keating said it measures 300 square kilometres, which is twice the size of the Hibernia oil field.
But that's not the only characteristic that makes it appealing to experts like Keating. He described the potential resource as "stacked," which could make for easier production.
"It is a classic structure, the type which industry looks for these days," said Keating.
But just how much oil is there? And could it be developed?
Nalcor is currently conducting a resource assessment, which will be available to the public in September or October, just ahead of this fall's licensing round.
It's one of 650 leads and prospects in the offshore, said Keating, and he's confident that some of those prospects will eventually be developed.
"There are a couple of dozen true monster-type prospects and of course not all of them will have commercial oil and gas quantities," he said.
"We'll drill in them and invariably be disappointed in a few. But invariably some will have commercial hydrocarbons in them."
Interest high in bidding process
Keating said there's a high level of interest in the upcoming licensing round, driven largely by the recovery in the price of oil.
But Nalcor's seismic exploration program, which has been ongoing for seven years at a cost of more than $100 million, has also helped attract $2.5 billion in exploration work commitments over the past three years, and seven new oil companies to the region.
Keating said the industry is "on the cusp" as oil companies transition from securing land to drilling exploration wells.
BP Canada, for example is expected to explore in the highly touted Cape Freels prospect next year, and more drilling is expected over the next two years.
In that collection of wells that have been submitted for approval, we will have more projects.- Jim Keating, Nalcor Energy
"In that collection of wells that have been submitted for approval, we will have more projects," Keating said.
There are now four producing oil fields in offshore, and all — Hibernia, Hebron, Terra Nova and White Rose — are located in the Jeanne d'Arc Basin.
The provincial government, through its Advance 2030 strategy, has set a target for 100 new exploration and appraisal wells over the next dozen years, and more than doubling daily oil production to 650,000 barrels.
Keating said the scale of opportunity is immense. He said the value of oil produced in the offshore over the last 20 years is $120 billion, with $20 billion of that flowing to the province in the form of royalties, and another $15 billion going to the federal government in the form of taxes and equity from its ownership stake in Hibernia.
Yet many feel the offshore, which covers an area of 1.8 million square kilometres, remains untapped.
Keating gave his address in a banquet room at the St. John's Convention Centre, and used the large room to put that potential into perspective.
He said the wealth extracted from the offshore has come out of an area "no bigger than the coffee cup on your table."