May 14, 1999
(Mines and Energy)

The following statement was issued today by Roger Grimes, Minister of Mines and Energy. It was also read in the House of Assembly:

Today, I would like to update members of the House of Assembly on the significant offshore drilling activity that is taking place in Newfoundland and Labrador.

We are building a vibrant petroleum industry in Newfoundland and Labrador. There is strong confidence and long-term commitment from industry for offshore Newfoundland and Labrador, making our province a national and international contender in the oil and gas industry. Since 1995, the Call for Bids in our offshore area has resulted in approximately $500 million in exploration commitments, not including our 1999 Call for Bids. We remain confident that our 1999 Call for Bids, of 10 land parcels, totaling 1.3 million hectares, will attract high interest for exploration in our province.

We currently have five rigs operating in the province. Two development wells - an oil producer well and gas injector well - are currently being drilled on the Hibernia field. The Hibernia field is currently producing about 135,000 barrels of oil per day from five production wells.

The Petro-Canada, Mobil, Chevron and Norsk Hydro Consortium have drilled three wells to date, using the Glomar Grand Banks semi-submersible drilling rig and operations recently got underway at a fourth location.

The first well, a successful delineation well on the Hebron Field, encountered a very thick oil-bearing reservoir that flow-tested 3,500 barrels of 21 degree API oil per day. A second well, an exploratory well on the South Nautilus, has penetrated oil-bearing sandstones and a third delineation well located at Ben-Nevis was recently completed. To date, no further details on these last two wells have been released.

Recently, it was announced that the glory hole dredging program at Terra Nova has commenced. Development drilling at the Terra Nova Field is expected to begin once the first glory hole has been completed. Activity continues to mount in offshore Newfoundland. On May 12 of this year, the Glomar Grand Banks spudded an exploratory well at Brent's Cove. This well is located five kilometres northwest of the Terra Nova Field and will take about 45 days to drill.

Husky Oil, the operator of the White Rose field, is also initiating a major multi-well delineation program. As of this April, the Bill Shoemaker spudded a delineation well that will take approximately 90 days to complete. The rig will also drill a second delineation well at a location to be determined after assessment of results from the first well are complete.

PanCanadian and its partners also spudded an onshore to offshore well in February at Shoal Point on the Port au Port Peninsula. Drilling operations are ongoing at this location.

Officials from my department are currently reviewing an application by Vulcan Minerals, a Newfoundland company, seeking approval to drill an exploration well in the Flat Bay area of western Newfoundland.

I am also pleased to inform the House that we expect to have up to five seismic vessels operating in our offshore area. We expect to see at least as much seismic as last year (70,000 line kilometres) and perhaps even more.

There has been a tremendous amount of exploration leading to significant expenditures in our onshore and offshore exploration activity. But this is just the beginning. Less than five per cent of Newfoundland and Labrador's offshore area is currently subject to licences, and we believe, there are still large areas remaining in our offshore that will be of interest to industry. We have already seen the interest in our offshore expand beyond the Jeanne d'Arc Basin, our most prolific basin to date. With so much left to explore, we are only just beginning to reap the benefits of an industry that is a strong contributor to the economy and the people of this province. Newfoundland and Labrador is expected to produce up to 400,000 barrels of light crude oil by 2004. This represents 1/3 of Canada's light crude oil.

To the end of 1998, total industry expenditures were $10.8 billion, which resulted in significant benefits to Newfoundland and Labrador companies.

1999 05 14 10:15 a.m.