Offshore Newfoundland and Labrador: Achievements and Potential

Abstract To achieve first oil production offshore Newfoundland and Labrador, many challenges had to be overcome, including conducting exploration and development activities in an area with limited infrastructure, resolution of a jurisdictional dispute, design of production systems to operate in the presence of icebergs and pack ice. These have been overcome. The success of exploration and production activities demonstrates that despite the presence of ice, these activities can be conducted in a safe, environmentally sound, cost-effective and profitable manner. In addition, significant potential existed to increase production from this lightly explored area. Figure 1: Area Comparison, Newfoundland - North Sea (Available in full paper) Introduction Oil and gas exploration in Eastern Canada's offshore Newfoundland and Labrador area, and the Norway and UK sectors of the North Sea, began about the same time. While first gas and oil production began offshore UK in 1970 and offshore Norway in 1975, it did not occur offshore Newfoundland and Labrador until 1997. First oil production offshore Newfoundland and Labrador was achieved only after several technical and political challenges were resolved. These included: conducting operations in environmental conditions similar to the North Sea with the presence of ice; lack of infrastructure to support exploration, development and production activities; jurisdictional dispute between the Federal and Provincial governments; and a boundary dispute between the Governments of Canada and France. Oil and gas exploration activity began onshore western Newfoundland in the mid-1800s. There was some success with a small quantity of oil produced and processed. It was not until much later that the potential for oil and gas offshore was widely recognized. In 1965, with the issuance of federal exploratory permits, exploration activity offshore Newfoundland and Labrador was initiated. The offshore area is large, about 185 million hectares, and contains in excess of 15 basins and subbasins with diverse geology. About half of this area is prospective for petroleum, and several basins have confirmed petroleum systems. Figure 1 presents a comparison of the offshore Newfoundland and Labrador area to that of the United Kingdom and Norway offshore areas. At the time of issuance of the first federal permits, there existed a jurisdictional dispute between the Government of Canada and the Government of Newfoundland and Labrador over ownership of the petroleum resources. As well there was a boundary dispute between the Governments of Canada and France over an offshore area of the French islands of Saint Pierre and Miquelon. Despite these disputes, exploration activities continued with industry reporting to Federal and Provincial government regulatory agencies. In the early years, little infrastructure was available to support exploration, development or production activities. In essence, the area was a green field site. The regulatory system was also at an early development stage and industry had to develop procedures and strategies to cope with the seasonal presence of pack-ice and icebergs. The first exploration well, drilled by Pan American and Imperial in 1966, encountered gas shows.