Newfoundland Just Upped The Stakes For International Oil Investment

The Provincial Government of Newfoundland and Labrador announced that an independent resource assessment covering the area of the West Orphan Basin had identified 25.5 billion barrels of oil and 20.6 trillion cubic feet of gas potential.

This discovery is based on new data covering nine parcels of land on offer in the West Orphan Basin within the area of the Canada-Newfoundland and Labrador Offshore Petroleum Board’s 2016 Eastern Newfoundland Region Call for Bids which closes in November 2016. The assessment was conducted by independent firm Beicip-Franlab.

Nalcor Energy has strategically created a perfect model for investment into the offshore energy sector in the region, releasing 3D survey results conducted offshore Newfoundland and Labrador in advance of a scheduled licensing round. Last year the province harnessed a record number in land bids on the Flemish Pass Basin which is expected to contain upwards of 12-billion barrels and drew $1.2-billion from industry for bids to explore the area.  With the West Orphan Basin showing twice that potential, it will be interesting to see how much the land sales garnish given the current findings and the current challenges with the price of oil.

Beicip-Franlab

Beicip-Franlab, headquartered in Paris, France was responsible for the assessment where approximately two percent or 20,000 square kilometers of Newfoundland and Labrador’s offshore area encompassing over 1.5 million square kilometers, took place.

 Jean Burrus, CEO of Beicip-Franlab explains the conditions of the find, “The independent integrated geological and geophysical study carried out by Beicip-Franlab, supported by the application of leading edge modelling techniques, has been instrumental in identifying and quantifying significant prospective oil and gas resources in the West Orphan Basin. Our analysis and modelling of the 2016 area indicate favourable geological conditions for oil and gas accumulations.”

West Orphan Basin

The survey covered 4,600 square kilometers of the West Orphan Basin during the summer of 2015, and it’s now expected to pay off. Nalcor, with its partners TGS and PGS, have been acquiring extensive 2D seismic data (110,000 line km to date) in the underexplored slope and deep water areas of the province’s offshore. To further delineate the West Orphan Basin, a 3D seismic survey was acquired over a portion of the area, and the data from the new 3D images has provided further insight into the area’s resource potential.

Jim Keating, Executive Vice President of Corporate Services and Offshore Development for Nalcor Energy, explains, “The 3D seismic survey has added additional insight which has been critical for this frontier area, and it’s played an essential role in helping us understand the basin’s resource potential. Each step of the process has reduced risk. Some of the key prospects in this area have been risk-reduced from a 1-in-20 to a globally competitive 1-in-6 chance of success.”

“The news announced by the Provincial Government is extremely important for our province and indeed our country. Newfoundland and Labrador’s deep water basins hold significant potential for future growth in oil & gas exploration, development, and production,” said Raymond Collins, Chair of the Newfoundland and Labrador Oil & Gas Industries Association (Noia). “This newly identified trend in a frontier area holds the potential for massive, new discoveries. Even in a time of lower oil prices, this could greatly influence the economy of this province, and the country.”

November 2016 Land Sales

Dwight Ball, Premier of Newfoundland and Labrador said,  “The 2016 independent oil and gas resource assessment adds to our growing knowledge about our offshore oil and gas potential. This leads to more exploration work by global companies giving us assurance that we will have a thriving oil and gas industry in Newfoundland and Labrador for many years to come. We do recognize that exploration is down globally due to current challenges in the oil and gas sector. Still, we are cautiously optimistic about positive results from the licensing round this November”.

Provincial Minister of Natural Resources Siobhan Coady says, “Data and knowledge are fundamental to our oil and gas exploration strategy. We now have contemporary, high-quality data on our offshore prospects which are attracting global attention, including the 2016independent oil and gas resource assessment in the West Orphan Basin conducted by Beicip-Franlab. Through new seismic work to date, we have defined over 20 basins, significant new basin areas, and over 350 leads and prospects – over 50 of which are in the West Orphan Basin.”

Notably, the government assessments declare that the size of the West Orphan Basin exceeds the entire Jeanne d’Arc Basin, and some of the prospects in this region are over 500 square kilometres in area – which is bigger than the Hibernia field at approximately 150 square kilometres. The scale of these prospects is global in magnitude and among the largest undrilled prospects in the world putting Offshore Newfoundland and Labrador in the forefront of exploration potential in 2017 and onward.