Equinor in two oil discoveries offshore Canada

The worst-kept secret in Newfoundland and Labrador’s oil industry has been confirmed: an exploration drilling campaign this summer in the Flemish Pass Basin has resulted in new discoveries.

The results will likely raise hopes about the future of the Bay du Nord project, which was deferred in March because of the global COVID-19 pandemic and collapsing oil markets.

But Equinor is not making any commitments.

“It is too early to comment on any potential impact of the discovery on the status of the deferred Bay du Nord development project,” an Equinor official wrote in a statement to CBC News.

“Equinor continues to assess the potential of Bay du Nord development project and the greater Flemish Pass Basin.”

Equinor issued a news release on the 29^th October acknowledging that wells drilled at prospects known as Cappahayden and Cambriol were successful, but that it’s too early to provide specific information on volumes.

“We are pleased to have made two discoveries offshore Newfoundland,” Paul McCafferty, Equinor’s senior vice-president for international offshore exploration, is quoted as saying in the release.

Wells were drilled in deep waters

The wells were drilled by the Transocean Barents, a rig known as a harsh environment, ultra-deep-water semi-submersible.

The rig arrived at Bay Bulls this week, and is currently demobilising before crossing the Atlantic Ocean for Norway in early November.

Equinor is a 60 per cent partner in the two prospects, with BP Canada owning 40 per cent.

The wells are located 500 kilometres east of St John’s. The Cappahayden well has a water depth of about 1,000 metres, while Cambriol has a depth of 600 metres.

Equinor says it also drilled what’s known as a “top-hole” at another prospect known as Sitka.

When asked if further exploration will be carried out next year, the spokesperson wrote: “Equinor is currently evaluating next steps related to potential future activities in the Flemish Pass Basin.”

The discoveries come at a time of crisis for the Newfoundland offshore, which has been hit hard by the combination of a global pandemic, and weak and uncertain oil markets.

Equinor announced in March that it was deferring Bay du Nord in order to explore ways of making the project viable in an era of low oil prices.

Three other discoveries made in area

The project grew out of three earlier discoveries known as Bay du Nord, Bay de Verde and Baccalieu, with an estimated 300 million barrels of recoverable oil.

Equinor is partnered with Husky Energy on Bay du Nord, which adds a new wrinkle to the project, since Husky is being purchased in an all-stock deal by rival Cenovus.

Husky did not respond to a question about the future of its interest in the Bay du Nord project.

According to Equinor’s website, an investment decision on Bay du Nord could be made in 2021, with first oil to be produced in 2025 using a floating, production, storage and offloading vessel similar to the Terra Nova FPSO and the SeaRose FPSO.

The Cappahayden and Cambriol discoveries are close enough to the Bay du Nord field to be connected by what’s known as a subsea drill centre to an FPSO, so insiders say this would improve the economics of the overall project.

If approved, a development in the Flemish Pass Basin would be the first deep-water oil producing field in offshore Newfoundland, and the first outside the legacy Jeanne d’Arc Basin, where the Hibernia, Terra Nova, White Rose and Hebron fields are located.

Equinor has said the Bay du Nord project could generate US$3.5 billion in revenue for the Newfoundland and Labrador government.

Source: CBC News