Oil prospect off Newfoundland faces ‘harsh realities:’ Statoil

ST. JOHN’S, N.L. — Jez Averty does not sound like an oil executive who expects a term sheet any time soon for developing what has been touted as Newfoundland’s next big offshore site.

In a speech Wednesday punctuated with bleak detail on how the price crash has kneecapped the industry, the vice-president of North American exploration for Statoil ASA offered only the most cautious optimism.

Development of the remote Bay du Nord site faces “harsh realities” in a climate that is not business as usual, he told the Newfoundland and Labrador Oil and Gas Industries Association conference.

Only the most competitive projects will attract evaporating investment dollars, he stressed. “It is not a walk in the park.” Bay du Nord can be a winner, he said, but it will take co-operation among all industry players and “collaborative relations” with regulators. The Norwegian-based company is committed to continuing those talks but Averty offered no hint that a deal is imminent.

Premier Paul Davis said Tuesday he’s optimistic a term sheet to develop Bay du Nord can be reached “in coming weeks.”

The parcel in the Flemish Pass, about 500 kilometres east of St. John’s, lies in more than 1,100 metres of water. It was billed as the largest global find in 2013 with an estimated 600 million barrels of recoverable light crude.

Statoil spokesman Knut Rostad said in a December interview that Newfoundland is a major exploration focus but that any decision on development of Bay du Nord was likely months or years off.

An estimated $200 billion US of investment capital has been cancelled or postponed since oil prices plunged by almost half over the last year to hover around $64 a barrel, Averty said. Averty did not answer directly when asked if the premier’s talk of a coming announcement surprised him.