News article
herald.ns.ca
Offshore mulls future on the Rock
By Michelle MacAfee / The Canadian Press
St. John's, Nfld. - It appears oil exploration on Newfoundland's west coast will be left in the
hands of junior companies this year as the big players consider their next move following
disappointing drilling results.
But some observers believe it may be time for them to begin turning their attention to other
prospects.
PanCanadian Petroleum Ltd. of Calgary announced last week it was abandoning its well in
Shoal Point, Nfld., after striking salt water.
The well was the fifth in recent years to be drilled either onshore or just offshore.
Two previous wells drilled by PanCanadian, in partnership with Newfoundland Hunt Oil Co.,
were abandoned. Another uncovered amounts of oil and gas that were later proven to be
commercially unviable.
In 1996, Talisman Energy Inc. abandoned its wildcat well in the same area after it flowed only
water during a series of drill stem tests.
Later this month, Newfoundland-based Vulcan Minerals plans to begin drilling on its onshore
property about 15 kilometres south of Stephenville.
President Patrick Laracy said he won't be deterred by PanCanadian's results.
"Talk to me after there have been 30 wells drilled and then we can say whether there can be
any commercial drilling," said Laracy.
"Any time you explore a new area your chances of success are slim, so with one success out
of five I don't think we're doing too bad."
By comparison, approximately 60 wells were drilled on the Grand Banks before the Hibernia
oilfield was discovered.
Another Newfoundland junior, Imperial Ventures, hopes to drill its prospect near the Shoal
Point well late this year, despite having its stock value cut in half last week on a massive
volume of over 900,000 shares based on PanCanadian's bad news.
Meanwhile, PanCanadian spokesman Alan Boras said Tuesday the $11.5-million Shoal Point
well was the only drilling the company had planned for this year on its seven parcels of west
coast land.
The company will now evaluate the data before deciding on future exploration plans.
"It could take a number of months," said Boras.
He added the company's west coast property must, in a sense, compete with the company's
other prospects for exploration priority.
Industry analyst John Clarke said he expects the three major companies with property in the
area - PanCanadian, Hunt Oil, and Mobil Oil - to shift their attention to finding higher
concentrations of both oil and gas in Nova Scotia's offshore and the Jeanne D'Arc Basin.
"They've given it a shot with four or five wells and the results have been fairly disappointing,"
said Clarke, an analyst with Toronto-based Deutsche Morgan Grenfell.
"If I condemned it out of hand it would be like saying in the mid-1970s that there was nothing
off the East Coast, but the more wells that lack success the less optimism there is."
Paul Barnes, manager of East Coast operations for the Canadian Association of Petroleum
Producers, agreed a significant discovery needs to be made soon to keep momentum building
in the region.
But he takes encouragement from the Canada-Newfoundland Offshore Petroleum Board's
recent decision to put two west coast properties on the bidding block for the next land sale.
"That normally indicates some level of interest by companies," said Barnes.
"They seem to be bullish but the proof is always in the results." |
