Oil glut coming to the energy warehouse: premier
Nalcor Energy says N.L. has significant, untapped reserves offshore
Plots set for bids in an upcoming exploration licence round hold anywhere from 9.5 billion to, at a 10 per cent chance, 18.4 billion barrels of oil in place, according to the Government of Newfoundland and Labrador.
“We are destined to be a global energy giant,” Premier Paul Davis said at the news conference called for release of the numbers, at the Johnson Geo Centre in St. John’s Thursday afternoon.
At an average estimate of 12 billion barrels, “That’s about seven Hibernias, to put it in perspective,” Davis said.
The numbers are coming out of early exploration work, particularly 2-D seismic data collection and electromagnetic studies under Nalcor Energy. That data has been paired with core data and well logs from past work by private oil companies, held by the Canada-Newfoundland and Labrador Offshore Petroleum Board (CNLOPB).
The information was all run through advanced models under consultant Beicip-Franlab.
That modelling suggests anywhere from 63 trillion to 191 trillion cubic feet of natural gas in addition to the oil estimates.
It is all spread over about 24,000 square kilometres of off- shore area, currently divided into 11 plots where exploration rights are available for purchase.
Companies are being asked to bid on exploration licences by mid-November. Whatever company promises to invest the most in furthering exploration work will be awarded the chance to take a closer look.
The areas set for bidding make up what is roughly a horseshoe-shaped area around existing oil discoveries by Statoil and Husky Energy, including the finds at Mizzen, Harpoon and Bay du Nord.
The oil potential sits at a water depth of 1,000-2,500 metres, but this is the first time this type of oil-in-place estimate has been released before exploration licence bidding.
Davis said the area up for bid covers less than two per cent of the province’s total offshore area, and the province plans to continue to produce similar information in advance of future exploration licensing rounds.
The methodology behind the new oil-in-place estimates is being provided directly to oil companies and online, on Crown corporation Nalcor Energy’s site.
The numbers being released are significant, said Noia president Bob Cadigan, but based on scientific study.
“To put it in one perspective, Norway, which is still considered prospective and a long-term oil producer, well, we checked with the Norwegian Petroleum Directorate and 12 billion barrels is what they expect, based on their current data, their remaining undiscovered oil to be,” he said. “So this puts us in the big leagues.”
Cadigan said the price of Brent crude is still a consideration.
However, current conditions — with pullbacks from previously planned work happening worldwide — mean costs are dropping such as day rates on drill rigs.
“We have to look ahead to the future. This is a temporary, shortterm downturn. It’s a little recession in the oilpatch. And our expectation is that prices will rise,” he said.
Provincial NDP Leader Earle McCurdy said the province is taking the right approach to land sales, incentivizing with detailed information.
But he made the point the assessment by Nalcor Energy and its consultants does not represent proven oil reserves.
“It would be great if it does (prove accurate),” McCurdy said. “The province needs it.”
Liberal MHA Cathy Bennett said, “This is the people’s resource. Any time there’s an increase in natural resource capacity potential, it’s a good news story,” she said. But she cautioned against banking on resources that are still without development dollars behind them.