Statoil studies options for developing Bay du Nord

Industry follower calls it a small step, but a sign the company is serious about deepwater development

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The West Hercules semi-submersible was contracted by Statoil and its partners to carry out a 19-month drilling program in the Flemish Pass Basin. (Statoil/Canadian Press)


In yet another sign that Newfoundland and Labrador's oil industry is headed into deeper water, Statoil is looking for help to study development options for its Bay du Nord discovery in the Flemish Pass Basin.

The company has issued expressions of interest for a subsea and marine study of the discovery, located roughly 500 kilometres east of St. John's.

The study will include the possible design of a floating production, storage and offloading vessel, known commonly in the industry as an FPSO, and the subsea production system that might be used.

Those who follow the industry say this is a small but encouraging step.

"It tells me that they're serious," said St. John's oil consultant Rob Strong.

"It's obviously not a done deal until they file a development plan. But it tells me that Statoil is certainly moving Bay du Nord along quite nicely."

But it doesn't mean oil will begin flowing anytime soon.

"You're probably 15 years from first oil," said Strong. "But it looks like at some stage there will be oil out of Bay du Nord. So yeah, I'm excited."

Technical and cost challenges

Statoil and its partners announced three years ago that they had discovered significant quantities of recoverable oil in the Flemish Pass Basin, with estimates of between 300 and 600 million barrels in Bay du Nord. There were also significant discoveries in areas known as Harpoon and Mizzen.

'You're probably 15 years from first oil, but it looks like at some stage there will be oil out of Bay du Nord. So yeah, I'm excited.' - Rob Strong, oil consultant

The company completed an ambitious 19-month drilling program in the area this past summer, and announced the amount of recoverable oil was probably closer to the lower end of the range.

But that hasn't slowed the effort to fully assess what has been described as a "core area for Statoil." 

It could become the first developing field outside of the Jeanne d'Arc Basin, where three producing oil fields are already active and a fourth is scheduled to begin production next year.

The big difference with the Flemish Pass is water depth of more than 1,000 metres, as opposed to 100 to 150 metres in the Jeanne d'Arc Basin.

The Flemish Pass will pose significant technical and cost challenges. The slumping price of oil is another obstacle that companies will have to consider, said Strong.

"There will be many challenges faced in development in this area," he said.

A spokesperson for Statoil, meanwhile, said the upcoming studies are a routine part of the "early phase" assessment of Bay du Nord.

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