Rig shortage delays search for gas south of Newfoundland

A company planning to look for natural gas south of Newfoundland says it may have no choice but to postpone its work, because of a shortage of rigs capable of working in deep seas.

Even though the Texas-based company is prepared to spend more than $100 million on an exploratory well in the Laurentian Basin — the first of its kind in the region, off Newfoundland's south coast — ConocoPhillips cannot find a rig able to carry out the work.

"It is difficult," said Chris Alonzo, manager of exploration.

"The main reason being that we need a rig capable of drilling in 2,000 metres of water in a harsh weather environment."

Only a few rigs in the world are even capable of such work, and most are already committed to long-term contracts.

One of those rigs, the Henry Goodridge, is currently drilling an exploratory well in the Flemish Pass, near the Grand Banks.

The problem comes at the same time that another major player in Newfoundland and Labrador's oilpatch, Chevron Canada, has announced a halt to other exploratory work. Chevron said that cost estimates for its attempts to explore the Orphan Basin were simply too much.

Bob Cadigan, president of the Newfoundland and Labrador Oil and Gas Industries Association, said the ConocoPhillips decision is disappointing, but does not spell long-term trouble.

"We're not particularly concerned," Cadigan said.

"We want to see exploration as early as possible but by the same token, you know, this is business and sometimes … sometimes, delays are inevitable."

Alonzo said ConocoPhillips remains committed to drilling in the Laurentian Basin, and that its plans will proceed when it secures a rig.