Businessman Pat Laracy: 'What we need are brand-new discoveries. And hopefully brand-new discoveries in different areas of the offshore.' (CBC)

Buoyed by a new announcement on the expansion of the Hibernia field, companies working in the oil industry off Newfoundland say they are hoping the good times will keep rolling through a more ambitious exploration program.

Premier Danny Williams announced a tentative deal to develop Hibernia South, which the Newfoundland and Labrador government expects to yield about $10 billion to the treasury through the project's life.

The news cheered the industry, although many players are wondering what will come along to replace existing fields.

"What we need are brand-new discoveries," said Pat Laracy, president of Vulcan Minerals.

"And hopefully brand-new discoveries in different areas of the offshore, because that presents … multiple opportunities," he said.

Exploration had been practically dormant for many years in the underwater parcels on the Grand Banks, where three fields are now in production. Hebron, the fourth field which is now in a development phase, was discovered in the 1980s.

Exploring the deep

Although there is talk of untapped satellite wells near existing fields — as many as six at Hibernia alone — there is worry that all of the big discoveries in the Jeanne d'Arc Basin have been made.

That has sparked calls to look further.

"We just can't stay still when the well runs dry. What are we going to do?" said Ivor Williams, who works with Newdock, a St. John's-based industrial dockyard.

A potential bonanza was unveiled in April, when the Canadian division of Norwegian oil giant StatoilHydro announced it had found hydrocarbons in a deepwater source in the Flemish pass, well away from the Jeanne d'Arc basin.

Statoil has not described the significance of the find, but that hasn't stopped companies from speculating on what the find, at a property called Mizzen, might entail.

"A billion barrels in size, in terms of recoverable size. It could be up to two to three billion barrels," Laracy told CBC News.

The problem with the Mizzen property, and exploration in similar terrain, is that it is in very deep waters, and that oil or gas will be expensive to extract.

Williams said incentives will be needed to encourage companies to move into those areas.

"We do need a bit more exploration in these areas," he said.

"I'm not sure how the governments will handle that one, for the licensing fees," he said. "Perhaps an ease on that will attract more companies."

Laracy said that companies may be reluctant to pursue exploration that could involve long-range commitments and heavy upfront costs.

"It's going to take, I guess, a market that's convinced that high oil prices are here to say," Laracy said.