Newfoundland’s Nalcor encouraged by oil tests in Labrador Sea

2/1/2013

Newfoundland and Labrador’s Nalcor Energy has discovered large, oil-prone sedimentary basins in the Labrador Sea – information that chief executive officer Ed Martin believes will generate significant new exploration drilling in the province’s offshore.

The provincially-owned energy company released the encouraging seismic results this week and is promoting them to global oil companies in an effort to bolster exploration activity and generate future new production as older fields begin to play out. It also has satellite imagery that reveals naturally occurring oil slicks in the water, suggesting the presence of crude deposit under the sea bed.

“What we found are some very, very, very attractive basins, which the information is telling us are oil prone, not gas prone,” Mr. Martin said in a telephone interview from St. John’s on Friday.

“We can clearly say [the structures] are there but you’re going to have to put a drill bit in to see whether [oil] is there or not. We have identified, significant new prospective basins that are of a size and class that are – and it’s an over-used term – but they’re world class. If you compare these structures to structures around the world, they’re on the large size, on the very large size in some cases.”

Mr. Martin cautioned that companies will have to drill exploration wells before anyone knows whether there are commercial pools of oil to be tapped under the icy Labrador Sea. Nalcor itself does no deep-water drilling but has assembled the initial scientific information that it will make available to any interested party, and will then invest in a partnership if a project moves toward production.

Some $35-billion (U.S.) was spent globally on deep-water exploration in 2012, but Newfoundland and Labrador accounted for only 1 to 2 per cent of that. The province is trying to attract additional spending by making Nalcor’s seismic information broadly available, and by promising regulatory certainty and a competitive royalty system.

(Globe and Mail)