Atlantic canada: background and opportunities

In its latest annual estimate of oil and gas reserves, the Canadian Association of Petroleum Producers pegs known offshore reserves for Atlantic Canada at 800 million bbl and 2 tcf of gas. These estimates only include known reserves.

Much of the exploration and development action is happening off the coasts of two provinces: Nova Scotia and Newfoundland and Labrador.

Nova Scotia drilled its first offshore well in 1967 and made a major discover near Sable Island in 1971.

As of Dec. 31, 2003, 124 wells had been drilled, with 22 yielding significant discoveries.

Nova Scotia's first offshore project, Cohasset-Panuke, began producing oil in 1992 and stopped in 1999 after producing 44 million bbl. That project is soon to be decommissioned. Still producing to this day is the Sable Project, which averages S50 MMcfd of gas.

Lately, Nova Scotia's offshore sector has slowed down. EnCana Corp. put on hold in late 2003 a scheduled new project. Deep Panuke, slating that it wanted to continue to look for a more cost-effective development method for the gas accumulation. More recently, Marathon Oil Corp. announced in September 2004 it was abandoning an S80 million test well off Nova Scotia's coast after failing to find gas in 4 years of exploration.

The province of Newfoundland and Labrador, for now, appears to have the greatest potential for new offshore exploration and development. So far, 129 exploration wells have been drilled, with 23 significant discoveries. The Hibernia project, which includes Canada's federal government as a partner, averages 200.000 h/d of oil and has operated since 1997.The Terra Nova project began production in early 2002 and averages 130,000 b/d.

A third major project is expected to ramp up shortly. Husky Energy and Petro-Canada have announced plans lo proceed with extracting White Rose fields 2.3 tcf of gas. As of July 2004, Husky announced that over 40 pot en tial stakeholders have indicated an interest in contributing to the gas project, which should be in place by 2010. Meanwhile, about 2S0 million bbl of crude oil are also estimated to lie below White Rose, and the first oil should be brought to the surface in 2006.