ExxonMobil seeks rig to drill in Flemish Pass, sparking new hope for offshore frontier
Terry Roberts | CBC News | Posted: January 9, 2018 10:25 PM | Last Updated: January 9, 2018
Offshore supply community welcomes spinoffs, job creation
Oil giant ExxonMobil is on the hunt for a harsh-environment drill rig to carry out an exploration program in the Flemish Pass next year.
The rig hunt was one of two expressions of interest issued in late December indicating interest in this frontier region in offshore Newfoundland and Labrador is still high, despite an exploration setback for Statoil in 2017.
ExxonMobil is looking for a mobile offshore drilling unit to carry out operations in the summer of 2019 in exploration licence area 1135.
The 266,000-hectare parcel is located southwest of discoveries by Statoil at Mizzen, Harpoon and Bay du Nord, roughly 500 kilometres east of St. John's.
ExxonMobil and its partners committed to spend a record $559 million in exploration on this licence when it acquired the parcel three years ago.
The Dec. 22 expression of interest (EOI) calls for a rig that can operate in water depths from 80 to 1,200 metres for an exploration drilling program of one, and possibly two additional wells starting in the summer of 2019.
But ExxonMobil is also leaving its options open, saying it may require the rig for other potential drilling projects until 2021.
Companies have until Jan. 12 to submit their expressions of interest.
A spokesperson for ExxonMobil Canada said it is in the process of pre-qualifying companies that can supply a drill rig.
It has also filed an environmental impact statement with the Canadian Environmental Assessment Agency.
'It sends a message to the supply community'
The news is being welcomed by the industry, knowing what it means for job creation and economic spinoffs, and in the longer term, potentially a fifth producing oil field in the offshore.
"There is renewed interest in the Flemish Pass area," said veteran oil industry consultant Rob Strong.
You've got to find it before you can produce it. And obviously they're looking for it. - Rob Strong, consultant
ExxonMobil has a 40 per cent interest in the highly prospective licence area 1135, with Statoil Canada Ltd., and Suncor Energy Inc., each holding 30 per cent stakes in the licence.
The EOI follows a disappointing exploration effort by Statoil in the Bay du Nord area, with a two-well drilling program showing that the amount of recoverable oil was in the lower range of previous estimates, or roughly 300 million barrels.
But there's no sign that companies are about to abandon the Flemish Pass Basin, despite its high costs, deep water and distance from land.
With Brent crude prices nearing $70 US, the stars are starting to line up, said Strong.
"I wouldn't hold my breath for production in the Flemish Pass. But you've got to find it before you can produce it. And obviously they're looking for it," he said.
Meanwhile, Chevron has also issued an EOI for exploration activities in licence area 1138. The work includes a seabed coring study for hydrocarbon detection that could be completed by this summer.
Strong said this is the type of work carried out in anticipation of exploration drilling.
"It does send a message to the supply community that there is a lot of interest in the Flemish Pass," Strong said.