On 8 April 2009 Norway’s Statoil announced a hydrocarbon discovery in Canada’s deepwater Mizzen oil prospect, offshore Newfoundland. This came six years after Petro-Canada abandoned a well in the region because of a lack of commercial volumes.
Statoil announced that the discovery was made in Exploration Licence 1049 in the little-explored Flemish Pass Basin, some 500km east-northeast of St John’s. With analysis of the well data still to be done, the company aims to apply for a significant discovery licence (SDL) in the coming months.
Canada’s Newfoundland and Labrador offshore oil industry has made its contribution to global energy supply. The impact was immediately evident, with the provincial economy receiving a big boost after the industry created new jobs, generated more provincial revenues, allowed lesser out migrations and promoted greater consumer spending.
By 2008 three oilfields were producing crude oil in provincial offshore areas – Hibernia, Terra Nova and White Rose. Hebron, the fourth field, is set to produce first oil in 2017. Exploratory drilling indicated that additional oil deposits exist in waters offshore Newfoundland and Labrador.
Statoil in Canada
Statoil is a Norwegian energy company. It was formed by the 2007 merger of Statoil with the oil and gas division of Norsk Hydro. Earlier known as StatoilHydro, the company was renamed to Statoil on 2 November 2009. Statoil is a fully integrated petroleum company with production operations in 13 countries and retail operations in eight.
In Canada Statoil is operator and partner in prospects off the coast of Newfoundland. Statoil has a 15% stake in Terra Nova, for which Petro-Canada is the operator, and a 5% stake in the Hibernia field for which Hibernia Management and Development Company is the operator. Statoil also has a 9.7% interest in ExxonMobil’s Hebron Ben Nevis oilfield.
Mizzen Prospect (EL1049)
Mizzen Prospect (EL1049) is Statoil’s first operated well and the second on the Mizzen prospect, which was earlier abandoned by Petro-Canada, EnCana and the former oil business of Norway’s Norsk Hydro in early 2003. At present the Mizzen prospect is an exploratory well from which Statoil is evaluating results.
Petro-Canada spent C$40m on drilling the Mizzen L-11 well. It found oil in reservoir sands, but abandoned the well as it was lacking in commercial quantities. In 2007 Statoil acquired Norsk Hydro’s oil and gas assets and by early 2008 Statoil bought Petro-Canada and Encore’s stakes in block 1049. Statoil’s latest discovery is about 10km north of the well drilled by Petro-Canada.
Erik Abrahamsen, Statoil Canada’s vice-president of east coast operations, said: “We have enough well data to prove our case to get the SDL, which will give us time to study the full potential.”
The company clarified that it expects to drill no further exploration or appraisal wells on the prospect before 2010.
Joint venture project
In March 2008 Statoil signed an agreement with Husky Energy. According to the agreement the two companies will participate in the Mizzen exploration well. Husky Energy has a 35% interest in Mizzen.
“The Flemish Pass Basin is a new and almost unexplored area on Canada’s east coast,” explains Johan K Mikkelsen, head of Statoil’s offshore business in Canada. “We are already participating in production from the Terra Nova and Hibernia fields and we have learned a lot from our partners in the 12 years we have been in Canada, and now look forward to preparing for our own drilling operations here.”
Henry Goodrich rig
The drilling operation on Mizzen proved to be challenging with a water depth of 1,100m and the North Atlantic winter storm season adding to drilling difficulties. Statoil signed a rig-sharing agreement with Husky and Petro-Canada.
Under the agreement Statoil could bring the harsh-environment semi-submersible Henry Goodrich drilling rig to offshore Newfoundland. This allowed for easy drilling of the second well on Mizzen.
Statoil owns interests in several exploration, development and production licences offshore Newfoundland. It is a partner in the Hibernia and Terra Nova fields offshore Canada, with 5% and 15% working interests. The company is also a partner in developing the Hebron offshore field.