OTC '15: Positive outlook seen for Canadian offshore and gas
KURT ABRAHAM, Executive Editor
HOUSTON -- A variety of Canadian officials and industry analysts painted a hopeful picture of their country’s upstream market at an OTC Industry Breakfast session. “We expect $46 billion to be spent this year on oil and gas development,” said Sara Wilshaw, consul general in Canada’s Dallas consulate. “Furthermore, we predict that from now until 2030, somewhere between $900 billion and $1.8 trillion will be spent on oil sands development. Our projections show that Canada will be producing 4 MMbopd before the end of this decade.”
Looking at the Canadian natural gas sector, Wilshaw said that while her country has supplied an average 15% of U.S. gas supplies over the last two decades, the surge of American shale gas production has forced Ottawa to look at other markets globally--“it is a political imperative.” She added that the National Energy Board has increased the licensing terms for LNG export facilities from 15 years to 40 years and instituted a faster write-off for capital expenditures.
Offshore the Canadian east coast, things are looking up for Nova Scotia, said provincial Deputy Energy Minister Murray Coolican. He noted that both Shell and BP have invested recently in Nova Scotia’s offshore potential. “Shell has acquired holdings in 10,000 km2 and completed seismic, including the first 3D wide-azimuth survey off the province,” said Coolican. “They will drill their first deepwater well in the third quarter of this year.” He added that BP now holds 14,000 km2 in waters 100 to 3,000 m deep. “They should drill their first well in this area during 2017,” continued Coolican. “The interesting thing is that BP made its final decision to invest as oil prices were coming down.” Both Shell and BP have brought in partners to help fund the cost of these activities.
Nova Scotia has LNG potential, explained Coolican, and there are already four export projects proposed. “We have an attractive tax and royalty regime, which is helping,” he noted. A new call for bids has been issued by the Canada-Nova Scotia Petroleum Board, and submissions will be taken until Oct. 29, 2015. “It’s a mix of shallow and deepwater tracts,” he added.
Peter Noble, president of Noble Associates, pointed out that relatively speaking, resource development is of greater importance to the Canadian governmental treasury than its counterpart in the U.S. “Government income from rents on natural resource development are 5.1% of GDP in Canada, while it constitutes just 1.7% of receipts in the U.S.”
While Nova Scotia is beginning to see an uptick in activity, Noble characterized East Canada as still being dominated by projects in Newfoundland & Labrador. “The new Hebron field project is the largest example, where it is being developed by a GBS installation.”
David McCaleb, director of Regional Teams, Frontier North America, at IHS, reminded the audience that East Coast Canada faces environmental challenges, including weather and icebergs, as well as many cost challenges. The latter group, he said, includes environmental impact studies, regulatory changes, and everyday, deepwater exploration and development costs. “You have to remember,” said McCaleb, “that an average deepwater exploration well offshore Newfoundland or Nova Scotia can cost $150 million or more. In addition, the Hebron GBS will cost, over its entire lifetime, $14 billion. So, this is still an expensive place to do business.”
As regards resource totals offshore East Canada, McCaleb said the veteran Jeanne D’Arc basin, offshore Newfoundland, has had 20 discoveries over the years and still holds remaining reserves of 3.22 Bboe. The Scotian basin offshore Nova Scotia has had 27 discoveries and retains reserves totaling 1.01 Bboe. In the newly active Flemish Pass basin, also offshore Newfoundland, three recent discoveries have been made, particularly by Statoil, and reserves of 761 MMboe have been found.
