GSI Admiral seismic vessel off the East Coast of Canada
on a long history of seismic data acquisition in the harsh North
Atlantic, a Calgary-based geophysical company is taking the plunge
to explore for oil and gas in the icy waters of offshore Labrador.
hiatus of more than 20 years, Geophysical Service Inc. (GSI) has
returned to Labrador's continental shelf, investing US $23 million
to purchase and equip a seismic vessel, and to acquire more than
10,000 kilometers of 2-D seismic data.
October, GSI completed this year's program of approximately 9,000
kilometers of 2-D seismic data off the Labrador coast. Labrador's
continental shelf is about 250 kilometers wide and extends 2,000
kilometers from the northern tip of Newfoundland to Baffin Island.
The area is characterized by rough seas and sporadic iceberg traffic.
the pointy tip of the exploration stage," said Paul Einarrson, GSI's
chief operating officer, chairman and executive vice president.
"We're very little, but very important.
been working here (Atlantic Canada) longer than anyone else," he
added. "We understand the geology, the players and their level of
interest in the oil and gas basins."
the late 1970s and early 1980s, the oil and gas industry drilled
27 wells off the Labrador coast, resulting in five significant discoveries
totaling 4.2 Tcf of natural gas and 123 million barrels of natural
gas liquids. Because the industry was looking for oil, the gas discoveries
were deemed a technical success but a commercial failure. Accordingly,
Labrador's stranded gas reserves have languished for more than 20
natural gas prices -- combined with a North American gas market
that is becoming increasingly constrained by supply -- make Labrador's
stranded gas reserves all the more attractive.
to Einarrson, recent developments in production technologies have
finally caught up to the remote areas of offshore Labrador, including:
- Liquefied natural gas.
- Compressed natural gas.
- Floating Production, Storage and Offloading (FPSO) facilities
like the one being installed at the White Rose Field, offshore
Newfoundland, which offer possible options for the harsh Labrador
to figure out how to get this gas to Boston," Einarrson said.
Campbell, president of Trans Ocean Gas, hopes to deliver stranded
gas to southern markets from the White Rose oil field by 2011, and
from the Labrador Shelf within 10 years' time. Campbell, a native
of Newfoundland, intends to supply markets that don't have existing
pipelines or liquefied natural gas (LNG) facilities. St. John's-based
Trans Ocean Gas has patented the concept of using ships to transport
compressed natural gas (CNG) in fiber-reinforced plastic (FRP) pressure
vessels. According to Campbell, FRP cylinders are already used as
fuel tanks for applications ranging from fighter jets to city buses.
Campbell, a petroleum engineer with both onshore and offshore facilities
experience, began researching the numerous technologies that might
be suitable to produce the stranded gas reserves of offshore Newfoundland
and Labrador. Campbell's epiphany came shortly thereafter, on a
street corner in Calgary: He observed a city bus drive by, equipped
with a FRP pressure vessel on the roof, and advertising that it
was fueled by CNG.
as they say, is history.
this year, Trans Ocean was one of nine companies invited by Husky
Energy to submit proposals on how to produce White Rose's 2.7 Tcf
of associated natural gas.
that we're on the verge of creating a multi-billion dollar a year
industry," Campbell said. At a cost of US $1 billion, Trans Ocean's
proposal contemplates the construction of three container ships,
each capable of carrying 1 Bcf of natural gas to market. Each ship
would be equipped with 690 cassettes (large racks) that, in turn,
each house 24 pressure vessels or cylinders -- a whopping 16,560
pressure cylinders per ship. Trans Ocean's ships would connect to
a FPSO unit, transferring gas into the pressurized cylinders at
3,600 psi (pounds per square inch).
to the Canada-Newfoundland Offshore Petroleum Board:
- The Grand Banks contain 5.4 Tcf of stranded gas reserves and 313
million barrels of natural gas liquids (NGLs).
- The stranded reserves of the Grand Banks and Labrador total 9.6
Tcf and 436 million barrels of NGLs.
- Oil production on the Grand Banks is approximately 350,000 barrels
per day from the Hibernia and Terra Nova fields.
- By late 2005 or early 2006, the South Korean-built Sea Rose FPSO
will commence production at White Rose, at an estimated peak production
rate of 92,000 barrels per day.
all about weight," Campbell said, adding that one cubic meter of
natural gas -- compressed at 3,600 psi -- weighs about one-third
of the equivalent volume of water. Container ships can therefore
transport CNG more efficiently and cost-effectively than bunker
asserts that its FRP pressure vessels are one-sixth of the weight
of comparable high-strength steel pressure vessels, are corrosion
resistant and unlikely to rupture from a side impact collision.
the FRP vessels are 100 percent corrosion resistant, we can take
unprocessed gas right out of the wellhead," Campbell explained.
"Corrosion is the Achilles' Heel of the oil and gas industry."
is preferable to LNG, he continued, because the liquefaction process
gobbles up 25 percent of the natural gas. An additional 5 percent
loss occurs when LNG is re-gasified and compressed before going
Was a Success
Millan, chief executive officer and chairman of Newfoundland-based
Canadian Imperial Venture Corporation (CIVC), sees CNG as a technical
option for producing Newfoundland's onshore gas reserves (see the
EXPLORER March 2004, Trenton-Black River play).
to Millan, an AAPG member, the hydrocarbons produced to date in
the Trenton-Black River play of western Newfoundland are rich in
gas and liquids. In 1995, Hunt Oil and PanCanadian Energy (now EnCana)
tested the Cambro-Ordovican age hydrothermal dolomite play with
the Port au Port #1 well. On an extended production test, the well
flowed a total of 5,012 barrels of oil and 9.2 mmcf of natural gas
over a nine-day period.
the next couple of years, CIVC will continue drilling the Trenton-Black
River play on the Port au Port Peninsula, situated on Newfoundland's
remote west coast. Millan can envision the day when a CNG ship from
Labrador -- en route to distant markets -- stops at his ocean-bounded
concession to load natural gas and associated NGLs.
years ago, during the heyday of the drilling on the Labrador Shelf,
Millan was Petro-Canada's vice president of frontier and international
well was deemed a failure," he said. "Generally speaking, there
was disappointment. But, geologically speaking, it was a technical
the early 1980s, he said that all sorts of "far out" ideas were
discussed for gas production and transportation in an area prone
to iceberg traffic and scours. Some of the more creative ideas included
constructing caves below the seabed and depth of ice scour for offshore
production, and using dirigibles and submarines to transport the
gas to southern markets.
Millan points to the acute energy needs of northern communities
in Labrador, the Canadian Arctic and nearby Greenland, and he questions
the current wisdom of where to market Labrador's gas.
the market for some of this gas is north and not south," he said.
"Perhaps we need to turn things upside down."
A Lot of
to Einarrson, several large oil and gas companies participated in
GSI's Labrador speculative seismic programs in 2003 and 2004. With
almost 300,000 kilometers of 2-D and 3-D seismic data in its library,
GSI bills itself as the largest owner of "non-exclusive" seismic
data in Canada's offshore frontiers (the Beaufort Sea, the Arctic
Islands, Hudson Bay, Baffin Bay, Labrador, Newfoundland and Nova
in 1930 in the United States, the original GSI was widely credited
with the development of digital acquisition systems and 3-D seismic
data acquisition and processing methods, leading to the formation
of Texas Instruments in 1950. GSI was subsequently purchased by
Halliburton Energy Services. In 1992, Davey Einarrson, a longtime
executive of the original GSI, purchased the proprietary rights
to GSI's speculative data in the Canadian offshore, launching the
new GSI in Calgary.
1971 and 1983, GSI acquired 32,000 linear kilometers of data off
the Labrador coast, or about 25 percent of all data acquired by
industry. Before embarking on its 2003 and 2004 acquisition programs,
GSI reprocessed 20,000 kilometers of its in-house 2-D seismic data,
using modern processing techniques.
in imaging deep geological formations were amazing, said Michael
Enachescu, an associate professor of geosciences at the Memorial
University of Newfoundland. Enachescu, also an AAPG member, is the
Senior Husky Research Fellow at Memorial University.
knows his way around the Grand Banks and the Labrador Shelf -- before
joining the Memorial University last year he spent 20 years as an
exploration geophysicist with Sun Oil (now Suncor Energy) and Husky
discovery driven, and they have the fire of exploration in their
bellies," he said.
is confident that the oil and gas industry has only touched the "tip of the iceberg" on the Labrador Shelf. He points to the industry's
historical track record of a 20 percent success rate, and he's optimistic
that the new 2-D seismic data will position the industry for additional
discoveries. In fact, Memorial University was the recent recipient
of a multi-million-dollar donation by GSI -- the company donated
all of its historical data, as well as its recent data acquisitions,
for offshore Newfoundland and the Labrador Shelf.
access to more data than most of the oil companies," Enachescu boasted.
the fact that there have been no exploration licenses nominated
yet on the Labrador Shelf?
he said. "I trust the geology -- if you step out from the significant
discoveries, you'll easily double the reserves."
a New Play
Gidney concurs. He is a director of Exploration Geosciences, a UK-based,
independent consultancy firm that earlier this year completed a
Labrador Shelf Atlas -- that followed on the heels of a series of
circum-Arctic G&G studies.
all include the integration of well, seismic, gravity and aeromagnetic
data; basin modeling; burial modeling; reservoir and source rock
distribution; and the generation of play fairways.
was to come up with new plays, as opposed to the one that had already
been drilled," explained Groves Gidney, an AAPG member.
identified many stratigraphic leads that remain undrilled today,
he said, including Tertiary and Cretaceous age delta and shoreface
"On a continental
shelf on a passive margin, you don't find the large structures that
you would find in a rift basin," explained Groves Gidney. However,
he described "the kitchen areas as huge -- the Labrador Shelf has
as good potential as the Scotian Shelf."
wells drilled to date on the Scotian Shelf have resulted in approximately
25 significant discoveries, or a 12.5 percent success rate.
Shelf includes the Saglek and Hopedale basins, which are separated
by an east-west trending basement high. To date, the significant
discoveries are situated in the Hopedale Basin, which contains a
thin Mesozoic age sedimentary section.
two main trapping mechanisms:
- Drape of Cretaceous and Lower Tertiary age sands over popped up
basement fault blocks.
- Stratigraphic pinchouts of sands against the flanks of the fault
Hopedale's southernmost part, two wells tested gas from an interpreted
erosional remnant of the Cambro-Ordovician carbonate platform (Trenton-Black
River equivalent) -- the Hopedale E-33 well flowed at 19.5 mmcf/d
and the Gudrid H-55 well at 8.1 mmcf/d.