Oil rig shakeup set for offshore N.L. as Statoil winds down drilling program

Hercules will soon be making way for Henry in Newfoundland's offshore, with one drill rig winding down operations while an old reliable is prepped for a return.

Henry Goodrich to return in coming months to begin two-year contract for Husky at bargain price

The Henry Goodrich oil rig was commissioned in 1985, and has been a mainstay in Newfoundland's offshore ever since. (Glen Carey/Submitted)

Hercules will soon make way for Henry in Newfoundland's offshore, with one drill rig set to depart as early as this spring, while an old reliable is prepped for a return.

Statoil has confirmed it will conclude an 18-month drilling program in the Flemish Pass in the coming months, meaning the West Hercules semi-submersible will likely leave the region.

But the number of rigs in the offshore is expected to remain at two for the foreseeable future, with the Henry Goodrich expected to return in May to begin a two-year drilling program for Husky in the White Rose Field.

A third rig, the West Aquarius, remains under contract to Hibernia until April 2017.

The shifting landscape in the drilling sector further adds to the uncertainty in the province's oil industry, which is reeling under the affects of a prolonged and punishing slump in prices.

The West Hercules semi-submersible is one of two rigs currently operational in Newfoundland's offshore.

Companies have been cutting jobs, streamlining operations and deferring spending on major projects.

Sources say there is already a surplus of workers who specialize in drilling, and the departure of the Hercules will only compound the situation.

The Hercules has a total complement of 251 crew, 65 per cent of whom are residents of Newfoundland and Labrador.

Statoil says it's not yet clear what's in store for the rig, which is owned by Seadrill.

An old regular returns

Any job losses could be offset by the return of the Henry Goodrich, which has been a mainstay in the oil industry off eastern Newfoundland for many years.

It is currently undergoing a refit in Norway, and will have a total crew of about 240.

Husky says about 90 per cent of the workers on that rig will be from this province.

The Hercules has been carrying out exploration and appraisal drilling of recent discoveries in the Flemish Pass. This includes a significant discovery known as Bay du Nord that is considered by many to be the next best hope for a producing oil field in the offshore.

A spokesperson for Statoil said results of that drilling continues to be evaluated.

Talks collapsed last fall

Talks between the provincial government and Statoil on an agreement to develop the field collapsed last fall amid a prolonged and punishing slump in oil prices that is delivering a debilitating blow to the economy.

Statoil says it is prioritizing its investments in favour of those that will bring the best long-term returns.

"Bay du Nord is no exception from this approach, which makes the current exploration program important to help further our knowledge of the potential of the area," Statoil stated in an email to CBC News.

Meanwhile, Husky is contracting the Goodrich at a day rate of $275,000, which is dramatically lower than the roughly $475,000 it was paying for the Goodrich a year ago.

The lower price is symbolic of how much the industry has changed, with one insider saying it's now a buyers' market for those wanting to carry out drilling and exploration.

About the Author

Terry Roberts

CBC News

Terry Roberts is a journalist with CBC's bureau in St. John's.


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