Nfld. & Labrador

Statoil sees Bay du Nord development in its future

A new Statoil drilling program in the Flemish Pass is creating a sense of optimism in the Newfoundland and Labrador offshore industry.

New exploration wells announced, company tells investors Bay du Nord is a future prospect

The West Hercules semi-submersible drill rig is shown here partially obscured in fog and rain just off Bay Bulls. (Eddy Kennedy/CBC)

A new Statoil drilling program in the Flemish Pass is creating a sense of optimism in the Newfoundland and Labrador offshore industry.

Alongside an announcement that the company was moving ahead with two new exploratory wells, Tuesday brought one more piece of evidence of further development: shout-outs to the Bay du Nord discovery in a presentation to market analysts.

The drilling program will start in the middle of the year. It will explore the area near the Bay du Nord find, and will likely provide some short-term work for hundreds of workers in the oil and gas sector.

But some consultants and insiders are thinking long term.

"Statoil has been very bullish on this area for many years," wrote Terry Childs, a director with the industry website Rigzone.

"The fact that they are continuing to appraise the area tells me there is definitely something there and that they are trying to determine the limits of the field."

Robert Cadigan, president of NOIA, says with more drilling planned after 2018, Statoil's announcement that it plans to drill in 2017 is a very positive sign. (Ted Dillon/CBC)

Robert Cadigan, the head of Newfoundland and Labrador's Oil and Gas Industries Association (NOIA), said the drilling announcement is a sign that Newfoundland is still a priority for Statoil — and shows they're trying to move quickly, as Statoil has submitted an environmental application for further possible drilling after 2018.

"This is really good news for our industry, the two wells alone, the drilling program, will create some activity," he said.

A presentation by Statoil CEO Eldar Saetre noted Bay du Nord as one of the projects that was envisioned for a launch after 2022. (Courtesy Statoil)

On Tuesday, company executives gave a presentation to analysts in London, and listed Bay du Nord among future plans in their "next-generation portfolio."

The potential project was one of the ones listed for possible start-up after 2022.

Long distance drilling

All of Newfoundland and Labrador's producing oilfields are found in the Jeanne d'Arc basin. The Flemish Pass, including Bay du Nord, is further east — and in significantly deeper water.

Rob Strong has been watching Newfoundland and Labrador's offshore oil sector since 1979. He says it's a good sign that Statoil is going back to explore more in the Flemish Pass, even if it is an expensive oil field. (Ted Dillon/CBC)

According to Rob Strong, a consultant in the oil and gas industry, that will present some challenges

The further distance means helicopters can't transport as many passengers, he said, which could mean more runs. Supply ships also have to travel further.

"The deep water is not really a challenge, but it's the other logistical implications that add up to make it a costly area," he said.

But he added that if Statoil knows about the extra challenges, and is still interested in the area, it's a good sign they're serious.

Both Strong and Cadigan say what the provincial sector needs is activity in the short term.

The Bay du Nord discovery, roughly 500 kilometres east of St. John's, is in much deeper water. The water depth in the area is more than 1,000 metres, compared to 100 to 150 metres in the Jeanne d'Arc Basin. (Statoil)

There's long-term potential, according to Strong, but with the Hebron platform moving out to sea this year, there soon won't be very much activity for construction and supply.

"Our members need the business opportunity, we have a lot of engineers and technologists that have been laid off in the downturn," added Cadigan.

"We need to keep those people here and employed to support the next wave of activity."

Reaping the benefits

Cadigan figures that Statoil drilling close to their previous Bay du Nord explorations means the company is likely considering whether it will find new oil to tie back to a centralized Bay du Nord structure.

NOIA president Robert Cadigan points to the location of the Bay du Nord oil discovery on an exploration map in his organization's boardroom. (Ted DIllon/CBC)

The oil and gas sector has taken a hit, and Cadigan said a recovery could help the entire province, not just his industry membership.

"You have to remember, every dollar that oil and gas contributes in royalties to the province is a dollar that's available to spend on either health care, education or some of the many other needs that the province has," he said.

About the Author

Garrett Barry


Garrett Barry is a CBC reporter based in Gander.

With files from Terry Roberts