Mega Projects

NEWS
Mega
Projects
INSIDE
require major labour
The Artic debate
Learning from loss
The price of crude
Newfoundland & Labrador Oil and Gas Industries Association
Volume 26, Number 3 Summer 2012
Canada Post Publications Mail Agreement 42407516
What we do matters
The Cahill Group of Companies
is a leading
multi-disciplinary construction company. We are proud to
be involved with projects that matter within the oil and
gas, mining, power generation, water treatment and
institutional markets.
Our employees are our source of strength and success. To
support our steady growth and dynamic projects, Cahill
employs over 200 full time staff with a peak workforce in
excess of 1,200 trades people.
Noia Board of Directors 2012
Chair
Michael Critch, NSB Group
Vice-Chair
Trevor Giles, Technip Canada
Past-Chair
Tim Lawrence, Oceaneering Canada
Treasurer
Sean Power, DFB Group
Directors
Rob Strong, Blue Water Agencies Limited
Marty Gaulin, Worley Parsons Canada
John Henley, Cahill Group of Companies
Doug Youden, Upstream Solutions Incorporated
Paul Dwyer, Schlumberger Canada Ltd.
Moya Cahill, PanGeo Subsea
Bruce Grant, Stewart McKelvey
Raymond Collins, PF Collins International Trade Solutions
Noia News
Editor in Chief: Deborah Inkpen
Editor: Marilyn Buckingham
Layout & Design: Steffanie Martin | Nudge Designs
Contributing Writers: Deborah Inkpen, Marilyn Buckingham,
13
23
31
Contents
Kristann Templeton, Moira Baird
Published by Noia | Printed by Cansel Wade
Opinions expressed in this publication do not necessarily reflect
4
President’s Perspective
7
Last Quarter at Noia
9
Mega projects require mega labour
13
Technology pushes the Arctic envelope
16
The Arctic debate
For advertising, call 709-758-6613, fax 709-758-6610, or email
18
The third module
[email protected]
23
ExxonMobil pursues innovation at Hibernia
25
Chevron expands its exploration footprint
signed and include your address and telephone number. Noia
26
Husky Energy updates conference on activities
reserves the right to reject or edit submissions.
29
Statoil’s ambitious exploration program
31
Breaking down barriers to offshore exploration
34
Suncor sets the stage for reliability
36
Learning from loss
40
The price of crude
40
Chevron Research Chair at MUN
the views of Noia.
Letters and guest articles are welcomed. Submissions must be
Editors of other publications may reprint articles from Noia
News, with appropriate credit.
Canada Post Publications Mail Agreement 42407516
Contact Noia:
www.noia.ca | [email protected]
41
FMC expands in Donovan’s
Box 44, Suite 602, Atlantic Place, 215 Water St.
41
New post for Skinner
St. John’s, NL, Canada A1C 6C9
Noia News 3
PRESIDENT’S PERSPECTIVE Robert Cadigan
President’s
Perspective
Robert Cadigan - Noia President & CEO
A familiar refrain that echoes through the halls of Noia is
“We need more exploration off our shores”. Offshore
oil production peaked in 2007-08 and has declined
steadily since then. Production is expected to increase
in 2018 as the Hebron oil field pumps first oil in 2017,
but new discoveries are needed to replenish the current
levels of oil production and for the continued growth of
the NL economy and the offshore oil & gas industry.
To start making new discoveries, we need to jumpstart
exploration now. The vast majority of the more than 140
exploration wells drilled off Newfoundland & Labrador
were done during the 1970s and 1980s.
Terra Nova, White Rose and Hebron were discovered
during the PIP grant era -- Hibernia was discovered prior
to those grants in 1979. Between 1980 and 1986, the
federal government’s Petroleum Incentive Program,
known as PIP, drove a period of intense exploration.
Ottawa paid out almost $2 billion in grants for exploration
offshore.
Since 1999, our province has been averaging two to
three exploration wells per year. We need to see an
additional six exploration wells drilled each year to
significantly increase the chances of making new
discoveries in the NL offshore. The industry success
rate is typically one in 10 exploration wells. Despite the
lower number of wells drilled in offshore NL, the average size of offshore oil discoveries is impressive. The
average size of our offshore discoveries has been 14.8
million barrels of oil.
4 Noia News
The federal budget announcement that the Coasting
Trade Act will be amended “to improve access to modern,
reliable seismic data” is a great first step to increasing
East Coast exploration activity. Noia was pleased to see
seismic vessels exempted from the Coasting Trade Act
provisions.
Additionally, Noia supports the streamlining of the
environmental regulatory review process for major
projects. Announced in the spring federal budget, this
amendment will include overlapping areas of federal
and provincial regulatory requirements and processes.
The budget proposes to set clear timelines, reduce
duplication, and focus efforts and resources on large
projects where the potential environmental impacts are
greatest.
While both of these amendments are good news, Noia
is concerned about the budget initiative to phase out
the Atlantic Investment Tax Credit (AITC) for the oil &
gas and mining industries by 2017. This will increase the
cost of developing new oil & gas projects on Canada’s
East Coast – and is particularly worrisome for future
small-field developments in the region. AITC provides
a 10-per-cent credit to the oil and gas industry in the Atlantic Provinces and the Gaspe region of Quebec for investments in new buildings, machinery and equipment
used, for example, in operating wells and extracting oil
and gas. The tax credit assisted smaller projects and
companies in the oil and gas sector. AITC continues to
be available to other industries, such as farming, fishing
and manufacturing. We do not view this tax credit as a
PRESIDENT’S PERSPECTIVE Robert Cadigan
subsidy. We view it as one method of defraying the high
cost of developing oil and gas fields in the East Coast’s
harsh, offshore environment where development costs
are higher than in the North Sea and the U.S. Gulf of
Mexico.
Another area of concern for Noia members is the
historic land tenure/leasing formulae allowing Significant
Discovery Licenses (SDLs) to be awarded on variable
evidence and then held in perpetuity. Hebron, discovered
in 1981, was held on an SDL until the 2008 benefits agreement. Regulatory changes by the C-NLOPB in 2006 apply
escalating rents to SDLs awarded as a result of exploration
on Exploration Licences. However, SDLs can still be held
in perpetuity.
To help move SDLs toward development, the federal
and provincial governments should establish a collaborative fallow land process, modelled on the proven U.K.
practice, to help define what constitutes work (and, by
converse, fallow status) on SDLs. This would ensure that
fallow land becomes available to oil and gas companies
that might be interested in actively exploring it.
Also of note is the fact that Transport Canada’s prescriptive
regulations have not kept pace with advances in marine
technology used in the offshore oil & gas industry. Two
issues frequently arise in Noia’s discussions with drilling
and supply boat contractors: 1. the length of time
and 2. the cost of complying with Canadian regulations
when drill rigs, support vessels and construction ships
are hired to work in Canadian waters.
Transport Canada’s marine regulations have not been
updated since 1988. They should be reviewed to ensure
appropriateness and effectiveness considering advances
in marine design. Adopting a goal-oriented approach
will also help to bring the regulations in line with other
jurisdictions and enable them to more readily adapt to
changes in technology.
We also feel that the Government of Canada can help
our industry by ensuring third-party access to offshore
infrastructure is regulated and attracts additional explorers
in more mature oil and gas regions. A 50-million-barrel
oil field may not warrant a stand-alone development, but
it may be feasible if the resource holder has the right
to use readily available infrastructure. This is common
in both the Norwegian and U.K. sectors of the North
Sea and opens opportunity for additional explorers and
small-field developments. In 2006, for instance, the
Norwegian Petroleum Directorate introduced rules
allowing third-party use of platforms and pipelines.
Since then, several small fields have been tied into existing
production platforms.
We believe third-party access to infrastructure would
spur small-field developments on Canada’s East Coast.
Such developments would extend the life of offshore
infrastructure, provide additional revenue for the federal
and provincial governments, and offset production
declines at maturing fields until the next oil and gas
field is discovered.
Noia continues to advocate for positive change in these
areas and others that will encourage further development
off our shore.
Robert Cadigan
Noia News 5
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LAST QUARTER AT NOIA Committees and Meetings
Last Quarter
at Noia
Committees and meetings
April
• April 18 – Executive Committee planning meeting of Noia’s Exploration Attraction Committee to determine mandate and participation
May
• May 15 – Board Chair Mike Critch and President & CEO Bob Cadigan met with representatives of the Labrador North Chamber of Commerce regarding holding a
bi-annual meeting in St. John’s about business
opportunities in Labrador
• May 14 – Executive Committee planning meeting of Noia’s Labour & Diversity Committee and Market
Analysis Committee
• May 17 – First meeting of Noia’s 2012 Exploration
Attraction Committee
June
•
•
•
•
•
•
•
•
•
June 4 – Noia representatives attended a federal
announcement hosted by Natural Resources Canada Minister Peter Penashue regarding environmental
regulatory changes
June 5 – Nalcor Energy’s AGM
June 5 – Exploration Attraction Committee meeting
June 8 – Noia Executive met with CAPP President,
David Collyer
June 11 – Noia Executive and Staff met with representatives from Statoil for an update
June 13 – Exploration Attraction Committee meeting
June 14 – First meeting of Market Analysis Committee
June 15 – Bob Cadigan met with CEO of DNV
June 15 – Bob Cadigan participated in a Subsea 7
Havila Tour
• June 18 – Board Director Ray Collins and Noia Senior Policy Advisor Moira Baird participated in Petroleum Exploration Enhancement Program (PEEP) Workshop
• June 24 – Noia Project Manager, Supply Chain
Terry Hunt represented Noia at Expo Labrador - Labrador North Chamber of Commerce
Noia News 7
LAST QUARTER AT NOIA Committees and Meetings
July
• July 10 – Noia Executive and Staff met with Government of NL Minister Terry French regarding the legislative changes to the Labour Relations Act
• July 6 – Noia Executive and Staff met with the Hebron Project Team for an update
• July 12 – Labour & Diversity Committee meeting
• July 13 – Exploration Attraction Committee meeting
• July 16 – Noia Conference Committee de-brief
• July 18 – Noia Executive and Staff met with Husky
Energy for an update
• July 24 – Fall Seminar Kick-off Meeting
Events & Socials
•
•
•
•
•
•
April 4 – Networking social for Noia members and industry players hosted by Irving Shipbuilding at the Delta Hotel
April 27 – Noia luncheon featuring CIBC’s Senior Executive Vice President and Vice Chairman Jim Prentice
April 30 to May 3 – OTC, Houston, Tx
May 16 – Noia members networking social hosted by Subsea 7
June 26 – ExxonMobil Farewell Reception for Meg O’Neill
July 3 – Technip Farewell Reception for Sam Allen
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8 Noia News
COVER STORY Mega Projects require major labour
Mega Projects
require major labour
Play on the Edge 2012 featured a number of updates
on large scale natural resources and industrial projects
in the region. As delegates heard, activity is high – the
Atlantic Provinces Economic Council, in its 2012 Major
Projects Inventory, identified a record $100 billion
worth of potential investment in 357 major projects across
Atlantic Canada. While this investment is good news for
the economy, a significant challenge for those in charge
of these large projects is finding enough skilled workers.
Hebron
Geoff Parker, project manager for Hebron, highlighted
a number of 2012 project milestones for Hebron, including
bund wall construction at Bull Arm, detailed design work
and approval of the development application and
benefits plan. Topsides fabrication will take place in 2013,
followed by integration, hook-up and commissioning
in 2016.
Noia News 9
L to R: Kari Plaster of IOC/Rio Tinto, John Pollesel of Vale Canada, Jim Irving of J.D. Irving
Parker said Statistics Canada data demonstrates a current
and future trend for labour markets: the number of retirees
far exceeds the number of new entrants into the workforce,
a gap that is expected to widen into the future.
Hebron project partners have undertaken a number of
proactive measures to address this issue. The Bull Arm
Labour Agreement stipulates that once the provincial
union list is exhausted, the project can look outside of
the province to fill vacancies. A database has also been
developed to allow trades people to register online at
www.bullarmtrades.com. Apprentices are seen as another
source of untapped potential so efforts are underway to
incorporate on-site training. Labour supply/demand
studies, provincial/industry task forces and diversity
initiatives are also being undertaken.
Lower Churchill
The Lower Churchill Energy Project is also gearing up to
be a major piece of the region’s energy storehouse. Gilbert
Bennett, Vice-President of the Lower Churchill Project with
Nalcor Energy, outlined the magnitude of the project: $1.4
billion in total income to labour and business; $212 million
in taxes to the Newfoundland & Labrador government;
and 18,400 person years of direct, indirect and induced
employment.
Again, the labour demands will be great. Based on
current estimates, the following engineering and project
management hours will take place within the province:
• Muskrat Falls Generating Facility – 1.5 million
person hours
• Gull Island Generating Facility – 4 million person hours
• HVdc Transmission System – 1 million person hours
10 Noia News
Construction and assembly requirements in the province
are estimated to be:
• 6 million person hours for the Muskrat Falls
Hydroelectric Development
• 13 million person hours for the Gull Island
Hydroelectric Development
• 2.5 million person hours for the HVdc Transmission System.
Irving
Elsewhere in Atlantic Canada, attention has been focused
on the growth of J.D. Irving Limited. Company president,
Jim Irving, told Noia delegates that a tight labour market
wasn’t always a concern for his company, but it is now.
Having recently secured a $25 billion shipbuilding contract
for the combatant portion of the National Shipbuilding
Procurement program, the company expects to grow by
1,500 direct jobs over an eight-year period.
Irving outlined the company’s growth strategy this way:
Grow at Home by working with local community colleges
& universities to build next generation shipbuilders; Bring
them Home by repatriating Atlantic Canadians who have
moved west for employment; and Make it Home, an effort
to attract some of the world’s shipbuilders to Canada to
continue their career.
Irving says the company has already invested millions in
training. He said they have also been working with
government to try to study and track worker availability to
determine regional worker pools.
“We’ve been working hard for a number of years on our
inventory of folks: What’s the skill? What do we need?
Where are we going?” Irving said.
COVER STORY Mega Projects require major labour
Vale
IOC
John Pollesel, COO of Vale Canada, outlined developments at one of the region’s major mineral projects – the
Voisey’s Bay nickel project in Labrador. To date, the mine
and concentrator has been established at Voisey’s Bay, the
hydromet demonstration plant has been built at Argentia
and the processing plant is under construction at Long
Harbour. Development of these sites has required extensive infrastructure such as port facilities, power supply, water supply and roads, accommodations and an airport at
Voisey’s Bay. The overall project is 66 per cent complete,
with more than 100 million person-hours of employment
generated since initial work began in April 2009. Seventyeight per cent of person-hours were in Newfoundland &
Labrador (some 3600 at the construction site).
Kari Plaster, VP of Human Resources for IOC/Rio Tinto is
also intimately familiar with the challenges facing the mining
industry. Plaster told Noia delegates that with a 57-year
history in the province, the company is a substantial
contributor to Newfoundland & Labrador. Apart from
employment, IOC’s tax contribution is over $200 million
annually. It also spends more than a billion dollars in any
given year (in operating and capital expenses) and over $1
million a year in community investments. She noted that
the economic spin-offs to suppliers, contractors and others,
and economic impact on the economy of Newfoundland
and Labrador amounts to much more.
Despite the milestones that have been reached, Pollesel
says the company must deal with a number of challenges
including global mineral markets and economic
conditions, a shrinking contractor/supplier base, a less effective competitive bidding process and human resources
shortages.
“Human resources are plaguing us right now,” Pollesel
noted. “In our Long Harbour project we are experiencing
a lot of difficulty in trying to attract the trades.”
To address these challenges Pollesel says they need to
have a more stable and sequenced project pipeline, build
in house capability rather than relying on contractors, build
more flexibility into labour agreements that will allow
increased use of travel permits and temporary foreign
workers, work closely with government and labour to
ensure more transparency on craft demand/supply and
examine ways to increase modularization which will allow
proponents to source globally.
“We’ve been operating in Newfoundland and Labrador
for 57 years, we’re continuing to invest in this province, and
we plan to continue contributing for some time,” Plaster
said. “We estimate that our mine has about 50 years of ore
remaining and we have ambitious plans for growth.”
As with the region’s other large projects, IOC has its
challenges, notably human resources. The company has
undertaken comprehensive planning to address this
issue, beginning with labour negotiations success in 2012.
Plaster explained the company’s commitment to employees
to help with both attraction and retention. The strategy
focuses on offering short-term rewards including base
salary and benefits; providing challenging work with clear
accountabilities and the appropriate tools and supports;
offering long-term rewards such as an employee shareplan
and superannuation; as well as providing development
opportunities for learning and growth.
“We’re just trying to focus on those things we know we
have control over when sometimes you don’t have control
over the resources coming into your business.” n
Noia News 11
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Kennedy Speaks
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Wade Locke
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Seal Cove Lab
Hebron Update
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G.I.S. Course
Wave Power
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P. E. Testing
CNA President
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GeoCentre
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Lab West CNA
Husky Smart Wells
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Muskrat Questions
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The Production Group
Husky Ice Mgmt.
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3D Printing
Geoff Cunningham
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Rob Strong
Watch episodes anytime: nlenergyshow.com
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Produced with the assistance of the Newfoundland and Labrador Film Development Corporation.
INSIDE CONFERENCE 2012 Technology pushes the Arctic envelope
Technology
pushes
the Arctic
envelope
It is widely recognized that specialized research and
development will be needed to develop the technology
necessary for oil and gas operators to continue moving
further north. With 400 oil and gas fields already discovered
inside the Arctic Circle, the resource potential is great.
The challenges associated with producing these
resources, however, are significant.
Several speakers addressed these issues at this year’s
Noia conference in June. They all discussed the economic
and political challenges associated with Arctic operations
due to remoteness and harsh climactic conditions that
will require specialized technological solutions to ensure
the health and safety of workers and the preservation of
the fragile environment. Each outlined the advancements
that have already been made to produce oil and gas in
cold, deep, ice prone waters, while looking at what will
be required to go even further afield.
Kieran Kavanagh, group technology director for Woodgroup
Kenny, said in order to look forward, you must first look
to the past. He discussed the top 10 challenges facing
operators in 1994, including HPHT (high pressure, high
temperature), subsea power generation and distribution,
ultra-deepwater riser solutions, subsea fiscal metering,
lower cost subsea well intervention, cold flow, dual-gradient
drilling, advanced materials, artificial lift and better flow
assurance modelling.
He demonstrated how many of these have been overcome,
pointing to several “technology wins” since that time.
For example, the area of deepwater floating production
has seen many ‘firsts’ in recent years: first steel catenary
risers (SCR) successfully deployed on the Shell Auger
TLP in the Gulf of Mexico; first production spar platform
at Neptune; first hybrid tower risers at Girassol; first
deepwater risers to 8,000 ft water depth; and the first
FLNG (floating liquid natural gas) project award.
Kavanagh said these kinds of advances are sometimes
difficult to see coming.
“It’s more evolution than revolution.”
Going forward, Kavanagh says there will be a strong
global focus on safety, environment, enhanced recovery,
remote developments, processing and power, FLNG,
reservoir characterization, lower cost drilling and integrity
management, as well as condition monitoring. He added
that there will need to be a particular emphasis on oil
spill preparedness and ice management, pipeline design
for iceberg scour environment, and managing remoteness
and long subsea distances.
Morten Karlsen, head of R&D for Statoil’s Going North
program, explained that his company is taking a stepwise
approach to developing solutions for Arctic environments.
“
Identifying priorities,
overcoming technical
challenges, strengthening
Arctic R&D capabilities
and fostering local and
international collaboration
are seen as key to moving
oil and gas development
further north.
”
“There is no one-size-fits-all technology.”
Statoil is involved in an ambitious R&D program which
he says can only be successful through collaboration,
technology sharing and transfer of knowledge. With
interests offshore Newfoundland & Labrador, in the US
Chukchi Sea, the Canadian Beaufort Sea, West Greenland,
Sea of Okhotsk in Russia, and the Russian and Norwegian
Barents Sea, Statoil is amassing the knowledge and
technology necessary to continue moving into more
frontier areas.
Noia News 13
“Offshore Newfoundland is an important gateway,” Karlsen added.
David Oake, President of Invenio Consulting, agrees.
He explained that Newfoundland & Labrador’s harsh metocean and offshore
ice conditions are often referred to as sub-Arctic. These conditions have
necessitated development of specialized regional technology and expertise,
and contributed to Arctic engineering and R&D capabilities that are
recognized and sought worldwide.
Among the province’s many Centres of Excellence is CARD (Centre for
Arctic Resource Development) which was established to conduct medium
to long-term research addressing the technological challenges in Arctic
oil & gas development. CARD recently completed its Arctic development
roadmap which outlines the top 10 R&D needs identified by stakeholders.
They include environmental protection, ice management, ice loads and
mechanics, station-keeping in ice, environmental characterization,
offshore safety and EER, hydrocarbon export technologies, Arctic drilling,
simulation and training, and dredging and trenching.
Oake added that offshore petroleum exploration and development
opportunities are now moving into harsher environments (further offshore
and into deeper water) such as the Flemish Pass, Orphan Basin and
Labrador Sea. Not only is the technology and expertise in place and
being developed for use in this part of the world, Oake says it is both
“sustainable and exportable.”
Oake also pointed out that Arctic development is becoming closer to
reality because of increasing access to northern shipping routes. In fact,
he said, ice-free shipping in the Arctic Ocean is predicted by some as
early as the summer of 2015 and the disappearance of multi-year ice
would reduce the risk of winter shipping.
However, he echoed the need for new technologies such as specialized
instrumentation, materials, coatings and winterization; flow assurance,
dynamic positioning, subsea processing, pipeline design; remote
communications, supply logistics, escape-evacuation-rescue; ice detection,
ice management and scour protection; oil spill clean-up, leak detection
under ice and simulation and human factors research (darkness, cold
temperatures, remoteness) related to operations in cold environments.
Identifying priorities, overcoming technical challenges, strengthening
Arctic R&D capabilities and fostering local and international collaboration
are seen as key to moving oil and gas development further north. Oake
said that the infrastructure, R&D capability, expertise and support network
is in place in Newfoundland & Labrador to help make this a reality.
“Newfoundland & Labrador is indeed the Arctic gateway for R&D.” n
14 Noia News
“Man and Machine
Underwater”
ST. JOHN'S
Newfoundland
and Labrador
October 21 - 23, 2012
Delta St. John's Hotel and Conference Centre
Conference Focus
The conference will focus on all aspects of the
offshore and onshore underwater industry.
Technical presentations and exhibitors will
address diving operations, as well as ROV
and AUV activities across North America.
www.underwaterconference.ca
Noia News 15
INSIDE CONFERENCE 2012 The Arctic Debate
The Arctic
debate
L to R: Alexander Shestakov, Bente Nyland, Charles Emmerson and Michael
Byers participating in the panel discussion on the future development of the
Arctic at Play on the Edge 2012
The United States Geological Survey (USGS) estimates that
the Arctic holds about 13 percent of the undiscovered oil,
30 percent of the undiscovered natural gas, and 20 percent
of the undiscovered natural gas liquids in the world. This
represents 90 billion barrels of undiscovered, technically
recoverable oil, 1,670 trillion cubic feet of technically
recoverable natural gas, and 44 billion barrels of technically
recoverable natural gas liquids in 25 geologically defined
areas thought to have potential for petroleum. Developing
the Arctic could be essential to securing energy supplies
for the future, but it will mean balancing economic,
environmental and social challenges.
Charles Emmerson, senior research fellow in energy,
environment and resources at Chatham House, told Noia
conference delegates in June that the Arctic and Arctic
development are very political. He said that this is a
complex risk and political environment.
“This is not a business-as-usual environment.”
Emmerson was part of a panel discussion at this year’s Noia
conference which also featured Michael Byers, Canada
Research Chair in Global Politics & International Law at
the University of British Columbia; Alexander Shestakov,
director of World Wildlife Fund’s Global Arctic Program;
and Bente Nyland, director general of the Norwegian
Petroleum Directorate. While each panellist gave a unique
perspective on Arctic development, there was considerable
agreement on the challenges and opportunities that
lie ahead.
Many of the challenges are well known; extreme ice
conditions, darkness, remoteness and lack of existing
infrastructure are among the issues that will need to be
addressed if operations are to take place in the Arctic.
Given the fragile ecosystem in which these resources
exist, there are also many unique environmental and
16 Noia News
safety considerations. Global cooperation, collaboration
and new technology, coupled with a cautious approach to
the environment and safety, are all seen as essential before
development can proceed.
Emmerson said this type of environment is only for
technically-competent players.
“Collaboration is key – with local stakeholders, with
scientists – to establish baselines, to mitigate political risk
and to demonstrate a pragmatic approach,” said Emmerson.
He noted that public confidence is key and cooperation
among companies will be essential to developing the
solutions needed to move forward.
“
Collaboration is key –
with local stakeholders,
with scientists – to establish
baselines, to mitigate political
risk and to demonstrate a
pragmatic approach.
”
Charles Emmerson, Senior Research
Chatham House
“Collaboration is a must – it’s really the only way that the
public and governments will allow this to continue,” said
Emmerson. “Companies will also need to collaborate.”
Alexander Shestakov expressed the WWF’s desire for
“full engagement and transparency” using a precautionary
INSIDE CONFERENCE 2012 The Arctic Debate
and stewardship approach. He outlined a number of
considerations including implementation of ecosystem
based management, technical and environmental Arctic
standards; national, regional and site specific contingency
plans; same season relief well capacity; infrastructure
development; seasonal restrictions and planning based
on response gap assessment; financial responsibility and
surveillance and compliance control.
Michael Byers pointed to ongoing international collaboration
as a step in the right direction. He said there have been
several joint mapping programs in Arctic waters and it’s
well known that many Canadian and European companies
have contributed technology to the Russian Arctic.
“Science transcends borders,” he noted. Bente Nyland
also noted many areas of international cooperation.
She pointed particularly to bilateral cooperation
between Norway and Russia on geological, technical,
environmental and regulatory issues in areas such as the
Barents Sea.
Panellists also discussed the Arctic Council’s role in helping
shape Arctic development. Established in 1996, the Council
is a high level intergovernmental forum to provide a means
for promoting cooperation, coordination and interaction
among the Arctic States, with the involvement of the Arctic
Indigenous communities and other Arctic inhabitants on
common Arctic issues, in particular issues of sustainable
development and environmental protection in the Arctic.
Canada, Denmark (including Greenland and the Faroe
Islands), Finland, Iceland, Norway, the Russian Federation,
Sweden, and the United States are all member states.
One of the final questions posed to panellists was whether
or not Arctic development is an intellectual curiosity or a
probable reality.
While the timing and likelihood of large-scale activity may
still be in question, members of the panel pointed out that
Arctic activity is already underway. Nyland outlined some
of the technical challenges that have already been
overcome with fields such as Snøhvit, the first offshore
development in the Barents Sea. Without surface
installations, this project involves bringing natural gas
to land for liquefaction and export from the first plant of
its kind in Europe and the world’s northernmost liquefied
natural gas facility.
All panel members also pointed out that the Arctic
encompasses much more than just oil and gas resources.
Fisheries and minerals such as iron ore, diamonds and
gold are also luring companies to the north. Increasing
access to northern shipping routes, including possible use
of the Northwest Passage as a global shipping route, may
be another factor in Arctic development. Shestakov added
that the Russian Arctic is already fully integrated into that
country’s economy through fishing, mining and shipping.
Though the pace of future Arctic development remains a
matter of some debate, there is consensus that a considerable
amount of work remains to be done before large scale oil
and gas developments populate the region. The panel
said that international cooperation, including substantial
investments in infrastructure, research and development,
will be needed to successfully navigate the Arctic frontier. n
Noia News 17
Natural Resources Minister Jerome Kennedy responding to reporters’ questions during Play on the Edge 2012
The third module
The provincial government and ExxonMobil have agreed
to disagree over where the derrick equipment set (DES)
module ought to be built. On the road to mediation and
arbitration designed to settle disputes under the 2008
Hebron Benefits Agreement, both sides are still talking –
and a negotiated compromise is always possible.
ExxonMobil triggered the arbitration process outlined
in the Hebron Benefits Agreement when it submitted its
capacity report to the provincial government on June 29.
Mediation is the first step to settle the dispute; if that fails,
the next step is arbitration.
told the Hebron Commissioner on Nov. 29.
Noia’s board of directors still believes the work can be
done here and supports the provincial government in its
resolve to see the DES module built in NL.
ExxonMobil issued a second EOI for the DES that closed
in December. The company issued a third EOI, which
closed in February. In January, two local companies each
submitted proposals to build the DES at Bull Arm and
ExxonMobil said it would assess the viability of those
proposals.
The Hebron agreement says the DES is one of three
modules, along with the living quarters and the drilling
support module, to be built in the province. That requirement
is subject to the following conditions:
• Fabrication of both the DES and drilling support modules will be done in the province, if there is sufficient yard capacity.
• Fabrication of the living quarters module will be
done in the province, if there is both sufficient yard capacity and labour to do the work.
During a presentation to the annual Noia conference on
June 21, Parker told delegates its studies show that
“attempting to build the third module in the province
would prolong the project schedule with no ability to recover.”
In November 2011, ExxonMobil’s senior Hebron project
manager, Geoff Parker, provided the first indication that
the DES might not be built in the province. Parker told
the Hebron Public Review Commission the company
had yet to find a fabrication yard in the province with
the capacity to build the derrick equipment set. He also
confirmed the company would build the drilling support
module at the Kiewit facilities in Marystown and the living
quarters at the Bull Arm fabrication site.
The province hired an independent U.K. consultant to
carry out an assessment when the issue of local yard
capacity was raised months earlier. Natural Resources
Minister Kennedy said the consultant’s report determined
that both modules – the living quarters and the DES – can
be built at Bull Arm without affecting the project’s ability
to deliver first oil in 2017.
During the Hebron public review hearings, Noia called for
all three modules to be built in the province. “We believe
it’s the proponent’s responsibility to find ways, look for
creative ways, to build all three modules in Newfoundland
and Labrador,” Noia president and CEO, Robert Cadigan,
18 Noia News
On the same day, Premier Kathy Dunderdale told reporters
ExxonMobil had sent a signal that the DES is going out of
the province and the company’s position is “completely
unacceptable at this point in time.”
Premier Dunderdale said the disagreement is about
“principle, first of all, that the spirit and intent of an agreement signed with any party and the people of NL be
honoured.” She said the province is interested in providing
work to the people of the province. The premier also said
there’s a process laid out for compensation, if there are
legitimate reasons for work to go out of the province.
INDUSTRY NEWS The third module
What was said
Geoff Parker, Vice-President of ExxonMobil Canada
and Senior Project Manager for Hebron
of the large modules would provide a total in-province
work scope that is 30 per cent greater than the original
estimate when the benefits agreement was signed in 2008.
Nov. 13, 2011, at the Hebron Public Review
Commission hearing
“We are adhering to the spirit and intent of the benefits
agreement. The agreement anticipated various scenarios
and included a process for working through them.
“The drilling equipment module, we have not yet found
a fabrication yard in Newfoundland with the capacity to
build that module.”
“Next week, we will initiate the first formal stage of that
process by submitting our detailed studies to the
government so that they can fully review the results.
June 21 presentation at the annual Noia Conference
“We understand and respect the province’s desire to ensure
as much work as possible is undertaken in the province.
The government has been very clear in its messages.
“The project team has studied in detail the construction
and fabrication capacity available in the province for the
Hebron GBS and topsides, including also the third module,
the derrick equipment set [DES]. Our studies indicate
that attempting to build the third module in the province
would prolong the project schedule with no ability to
recover. That would have significant financial implications
for the co-venturers and for the province.
“We want to maintain a mutually beneficial relationship
and we are committed to working together to deliver the
project and its associated benefits to the province.
“Several speakers this week have reminded us that our
industry provides approximately one-third of the
province’s revenues. As the current producing fields
offshore Newfoundland & Labrador experience their
normal declining production rates, we believe that
delivering the Hebron platform as early as possible gives
the greatest return to all stakeholders, including everybody
in the province who relies on those revenues for
“When the Hebron Benefits Agreement was signed, all
parties recognized that there could be challenges associated
with the capacity and labour availability in the province,
and there were mechanisms built into the agreement to
manage our way through such scenarios.
“With more project definition, we’ve determined that two
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Noia News 19
INDUSTRY NEWS The third module
infrastructure and services.
“The next several years are going to be busy ones for
the project team and for the contractors, suppliers and
workforce in the province. That will be the challenge for
us and for others in the province in executing projects in
that timeframe.”
Premier Kathy Dunderdale
June 19 keynote speech at the annual Noia conference
“With Hebron, as with every development project, I make
no apologies for fighting hard to secure maximum benefits
for Newfoundland and Labrador, leaving no stone
unturned to make ensure we are as fully engaged as
possible in all the work associated with this project.
“In recent weeks, we have learned from Exxon that it
is considering building the Hebron drilling equipment
module outside the province. Exxon has suggested that
a constraint exists in regard to yard capacity. We disagree
with this assessment, and our opinion has been confirmed
by an expert advisor.
“We expect Exxon to live up to the terms of the Hebron
benefits agreement and we will pursue the remedies
under the agreement should Exxon not reconsider its
present direction. The importance of living up to agreements
like this one is paramount.”
July 13 media scrum at Confederation Building
following a meeting with ExxonMobil
“We believe that the work can be done here in the province,
and we indicated that to ExxonMobil.
“They have given us a capacity report which is basically
their argument as to why the DES can’t be completed
here in the province. We’ve had it now for about two weeks.
We’re responding to their capacity report with our position.
… We’ll complete that certainly by the end of the month.
“They’ll have our response, then we sit down and have
discussion. If the two sides can’t reach an agreement,
an arbitration process is outlined in the Hebron Benefits
Agreement.
“That doesn’t preclude us having a discussion and trying
to resolve the issue outside of that process. Regardless, we
need to be talking to one another even though we disagree
in positions that we’ve taken respectively at this point.”
Natural Resources Minister Jerome Kennedy
June 1 media scrum following approval of Hebron
development application
“I think that the statement made today by ExxonMobil,
while technically doesn’t say that the decision to move
the DES out has been already made, practically, that’s in
effect is what’s happened today.
“I met with ExxonMobil a couple of weeks ago and
informed them that, from the province’s perspective,
all three modules could be built in this province, that
the Hebron Benefits Agreement is meant to benefit
the people of this province. We are to be the primary
beneficiaries for our natural resources, and ... based on
the information that’s come forward in the last couple of
months our position as a government is that the DES and
the accommodations module could both be built at
Bull Arm. …
“A line has been drawn in the sand, and the minister and
I are here to tell ExxonMobil, again, and to tell the people
of Newfoundland & Labrador ... that that position is
completely unacceptable at this point in time.
“I’ve indicated to them [ExxonMobil] in no uncertain terms
and in very strong … language that we as a province, as
a people, are to benefit from our natural resources. That’s
the intent of the Hebron Benefits Agreement. …
“We have made our view very clear and we firmly believe
at this point in time that the capacity exists to do the DES
here in the province. ...
“At the end of the day, ExxonMobil could say ‘We are
going outside the province no matter what the province
says,” and at that point, if we were successful, they would
be subject to significant penalties.”
June 21 media scrum at Confederation Building
“What we negotiated was benefits right here in
Newfoundland and Labrador for the people of this province, and that’s what we want. If the work wasn’t important,
we would have negotiated those monetary benefits in the
first place. So work is what’s always most important.”
20 Noia News
June 20 speech at the Noia Conference
“Our firm position, as stated by Premier Dunderdale
yesterday, is that the Hebron development must proceed
INDUSTRY NEWS The third module
based on the term negotiated in the 2008 Hebron
Benefits Agreement. This agreement ensures that the
people of Newfoundland & Labrador receive the maximum
benefit from Hebron, and as Premier Dunderdale noted
the province feels strongly that we have the capacity to
build all three Hebron modules in our province. We have
two local proponents who have submitted proposals to
build the DES and the living quarters at Bull Arm. In my
opinion, the people and companies in this room have the
expertise and capacity to do all of the work in our province
and it should be done here.”
July 13 media scrum at Confederation Building
following a meeting with ExxonMobil
“Basically, the Hebron benefits agreement outlines the
conditions that must be met, but the real issue here, in
terms of the building of the DES is that of physical
infrastructure. They are essentially taking the position
that you cannot build the living quarters and the DES at
Bull Arm, either simultaneously or with an overlap without
affecting first oil. … We take the position that both can be
built at Bull Arm.
“But, then, as the premier indicated today we had a very
frank and open discussion and we didn’t preclude further
discussions after the capacity report is replied to. So we
expect within the next few weeks there will be further
discussions. …
“It will still be ExxonMobil’s decision, at the end of the
day, whether or not to build it here. If they decide to go
outside the province, that’s when the arbitration procedure
kicks in. But the whole purpose of the way this Hebron
Benefits Agreement is structured is that there will not be
a delay as a result of the arbitration procedure. …
“Today, we came away from the meeting with a much
better feeling that we can have further discussions, that
the benefits agreement is set up to highlight the dispute,
but we had a real good dialogue today. So, we will have
further discussions, but whether or not we can resolve it
I don’t know.
“I certainly hope so because the last thing we want here is
to delay first oil. The amount of royalties to the province,
the benefits to the province are significant so we’re going
to have that discussion and we’ll see where it goes.” n
Noia News 21
Meg O’Neill, former president, ExxonMobil Canada addresses delegates during Play on the Edge 2012 while Noia Board member Trevor Giles and Husky Energy’s Malcolm Maclean look on.
ExxonMobil
pursues innovation
at Hibernia
Six years ago, innovation paid off for the Hibernia partners
with the discovery of additional reserves in the oilfield’s
southern extension.
Advances in a technique known as reservoir connectivity
analysis led the partners to drill a wildcat well into the
southern part of the field from the Hibernia platform.
The well tapped into additional oil that has helped bring
Hibernia’s recoverable reserves to over 1.3 billion barrels
of crude – more than double the reserves estimated in
the mid-1990s. The result is the ongoing, $1.7-billion
development of the Hibernia Southern Extension (HSE).
Meg O’Neill, former president of ExxonMobil Canada,
credited the success to the relentless pursuit of innovation
to find new ways to meet increased demand for energy.
(O’Neill has since moved to her next posting in Norway
as lead country manager.)
“HSE represents a significant addition of reserves of over
100 million barrels,” she told delegates attending Noia’s
Play on the Edge 2012 conference in St. John’s on June 19.
“With these successes, it is anticipated that Hibernia will
continue to produce until the year 2040 – twenty years
longer than original project life.”
“
The picture I’ve painted
for you today is a rosy one,
but the message I want to
leave you with is there is no
room for complacency.
”
M eg O’Neill
Former President, ExxonMobil Canada
O’Neill said Hibernia is a success story that has opened
the way for a new industry in the province despite the
commercial challenges it faced in the 1990s. She said
the stakeholders worked together to overcome the
challenges and today the offshore oil industry contributes
$1 in every $3 of direct revenue in the provincial treasury.
Noia News 23
INDUSTRY NEWS ExxonMobil pursues innovation at Hibernia
“The picture I’ve painted for you today is a rosy one, but the
message I want to leave you with is there is no room for
complacency.”
O’Neill said the industry must “tirelessly follow the path of
continuous improvement.”
“We operate here in a cold and harsh marine environment. The
demands presented by our relatively remote location in the
North Atlantic drive our cost structure to the high-end of the
curve. It challenges us all to be resourceful and innovative.”
“This is a very competitive energy marketplace … that we
play in. As industry and government leaders, you know every
day what it means to serve your customers or the public better
by adapting to changing conditions and striving always to be
more efficient.”
“In order to make Newfoundland and Labrador more of a place
that remains attractive to investment, every one of us involved
in the industry – small businesses and large – must work relentlessly to innovate and find ways to do our jobs better and more
efficiently.” n
Hibernia highlights:
• Hibernia shut down for three weeks in midAugust for planned maintenance. The
workscope included turbine replacements,
compressor overhauls, gearbox inspections and
what O’Neill called a “very ambitious” program
of equipment inspections and recertifications.
Also on the to-do list was a complete cleaning
of the produced water system (degassers,
hydrocyclones, coalescers and strainers).
Manifold valves will also be installed for future
well tie-ins from the Hibernia Southern Extension
(HSE) project. To accomplish the work, HMDC
added additional lifeboat capacity to maximize the
number of people on board the platform to 360.
• Work on Hibernia’s gas lift project continues with
the hook-up and commissioning of modules
installed last summer. It’s designed to improve
production and recovery.
• The Ham 318, a trailing suction hopper dredger
operated by Dutch-based Van Ord, arrived in
St. John’s Harbour mid-June to begin work on
HSE. The 227-metre vessel is dredging the
excavated drill centre to house subsea
production equipment that will be tied back
to the Hibernia platform.
• The semi-submersible drill rig West Aquarius,
which is on contract to ExxonMobil, is expected
to arrive in Newfoundland waters later this year
or in early 2013. The rig will drill water-injector
wells for HSE, but first it’s scheduled for exploration
wells for Statoil Canada in the Flemish Pass and
Jeanne d’Arc Basin. “While work on HSE continues,”
said O’Neill, “we continue to evaluate opportunities
for additional drilling in the offshore and we
hope to keep this vessel here in our waters for
some years to come.”
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24 Noia News
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Chevron expands its
exploration footprint
Chevron Canada expects to start drilling its
third Orphan Basin exploration well – dubbed
the Margaree A-49 – later this year.
“It’s a very, very important well for us,” said
Mark MacLeod, Chevron’s vice-president of
Atlantic Canada.
“We’re going to use the Stenna Caron drill
ship, which is currently operating in the U.K.,
and our over-arching priority is incident-free
operations like we achieved in the 2010
drilling program. We’ve assembled a very
experienced team.”
MacLeod was speaking June 19 to delegates
attending Noia’s annual conference.
Chevron has held an ownership interest in the
Orphan Basin since 2004, and is the operator
of the sole exploration license in the area.
“At the time, we made a work program
commitment of $673 million and we’ve
drilled now two wells. We started with the
Great Barasway well in the north and then in
2010 we drilled the Lona well.”
Earlier this year, Chevron announced a jointventure with Statoil and Repsol to explore
the Orphan Basin and the Flemish Pass.
“This new joint-venture is a really important
strategic step for Chevron and strengthens
our overall position in offshore Newfoundland.”
Chevron’s exploration of the Flemish Pass
started last summer with a 2D seismic
survey in the region, where the company
and its partners hold two exploration licenses
(EL 1125 and EL 1126) that were issued in
January.
“That data was clearly, clearly instrumental
in establishing this new joint venture with
Statoil and Repsol, and clearly helped us
be successful in the land sale in the fall of
last year,” said MacLeod. “So our exploration
footprint has grown.”
Last year, the partners bid $347 million in
work commitments for those two Flemish
Pass ELs. This summer, Statoil is conducting
a 3D seismic survey in the area.
Chevron is also partnered in the Hebron
project (26.6 per cent), the Hibernia oilfield
(26.9 per cent) and Terra Nova (one per cent).
“We try to add value, we try to help the
operator move these projects forward.”
One example, he said, is using 4D seismic
to “optimize reservoir development”. It
examines how a reservoir is performing over
time, and has been applied in the Jeanne
d’Arc Basin, particularly at the Terra Nova oilfield.
“After some production in the field, you
simply re-acquire the survey using the same
technique in the same area … compare the
two surveys, look for differences in those two
surveys, and those differences reflect the
fluid movement and help you to optimize the
reservoir development.”
“So, 4D seismic is really 3D seismic repeated
the same way at a later time.”
Chevron is also part owner and administrator
of the oil tanker Kometik.
The 272-metre tanker, which has transported
more than 400 million barrels of crude since
1997, headed to a drydock in Ferrol, Spain,
at the end of July. MacLeod said the work
coincides with a three-week shutdown at the
Hibernia platform for planned maintenance
in mid-August. n
Noia
Newsvice-president
25
Mark MacLeod,
Chevron’s
Atlantic Canada
Malcolm Maclean, vice-president of Atlantic Region Developments, Husky Energy
Husky Energy
updates conference
on activities
While Noia delegates were participating in Play on the
Edge 2012, Husky Energy was preparing to wrap up its
125-day, off-station program for the SeaRose FPSO, as
scheduled, in August.
The White Rose oilfield shut down, which began on May
3 for 18 weeks, included four weeks of maintenance and
repairs for the floating production, storage and offloading
(FPSO) vessel in the Harland & Wolff drydock in Belfast.
It was the FPSO’s first transatlantic voyage since it sailed
from Korea to Marystown in 2005 to be outfitted with
topsides modules.
“This has been a major undertaking and over 100,000
person hours have been expended in advance of the
disconnection of the vessel’s buoy,” said Malcolm Maclean,
Husky’s vice-president of Atlantic Region Developments,
during the annual Noia conference.
The disconnect occurred May 18.
“At least another 100,000 man hours will be worked in
Belfast during the drydocking period.”
More than 200 Husky staff and contractors worked
alongside more than 400 Harland & Wolff employees in
Belfast. The SeaRose left the shipyard July 4 and
resumed production at White Rose in mid-August.
In other news, Husky contracted the Cristobal Colon,
the world’s largest dredging vessel, to excavate a new
drill centre at South White Rose that will house subsea
equipment tied back to the FPSO.
“This work will be a precursor to the phased development
of the South White Rose field. Because of its location,
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INDUSTRY NEWS Husky Energy updates conference on activities
the South White Rose Extension will
be developed by a new subsea tieback
to the SeaRose FPSO.”
The same tieback technology was
used to develop the North Amethyst
satellite, the first field expansion of
its kind in the province’s offshore.
“Engineering works for this new
subsea system is currently underway
here in St. John’s.”
In late May, Husky filed a project
description for what the company
calls the White Rose Extension Project
with the offshore regulator – triggering
an environmental assessment of the
project. It proposes full development
of West White Rose and South White
Rose.
Husky is considering two options for
the project:
• A fixed wellhead platform, also known as a concrete gravity
structure (CGS), that is capable of drilling wells; or
• a subsea tieback to the FPSO.
Maclean said Husky and its partners,
Suncor Energy and Nalcor Energy,
expect to select one of the two
development options when the engineering is completed around the
end of this year.
Unlike the Hibernia or Hebron gravity
base structures, the proposed CGS
would not have any processing or
storage capabilities.
“These facilities would still be
provided by the SeaRose FPSO,”
said Maclean.
To assess the CGS option, Arup Canada
has been conducting pre-FEED and
FEED studies since it won the
contract in April.
“Over 70 personnel will be required
to carry out this work. Arup is currently
building its team and transitioning
this work, again, to St. John’s.”
Husky has a tentative agreement
with the Argentia Management
Authority to lease 15 hectares of
land to build the CGS.
“This will require the construction of
a purpose-built graving dock.”
The graving dock would be located
at the old U.S. military base on the
north side of the Argentia harbour.
“It is a brown-field site with good access
to Placentia Bay and tow routes out
to the Grand Banks. It is our expectation
that this new graving dock could be
re-used for other projects.”
“
This has been a
major undertaking and
over 100,000 person
hours have been
expended in advance
of the disconnection of
the vessel’s buoy.
”
On the exploration front, Husky expects
to participate in up to two wells this
year, according to the company’s second-quarter financial report issued
in July.
“This includes drilling in the Jeanne
d’Arc basin and further exploration
near the non-operated Mizzen
discovery in the Flemish Pass,” said
the report.
In Greenland, the company also
anticipates a two-year extension on
its initial exploration program will be
finalized by the third quarter. Husky
holds two exploration licenses off
West Greenland. n
Noia News 27
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A message from NL Offshore Oper ators & Explorers.
Statoil Canada’s Atle Aadland talks with a CBC reporter following his presentation to Noia conference delegates on June 20.
Statoil’s ambitious exploration program
Statoil Canada will be busy this year and in 2013 proving
up resources at its Flemish Pass discovery estimated to
contain between 100 million barrels and 200 million barrels
of oil.
In his first speech at Noia’s annual June conference, Atle
Aadland, vice-president of Statoil Canada Offshore
Upstream, quantified the size of the company’s 2009
Mizzen discovery.
“What this means is that we have a proven petroleum
system in the area and we are very optimistic about the
future of Mizzen and our other Flemish Pass prospects
in the upcoming campaign,” said Aadland. “We will
continue to assess this discovery to determine if it can be
economically developed.”
“But our focus right now is to prove up the resource
potential in the Flemish Pass Basin by continuing to
explore for additional volumes of oil.”
Aadland said the company is committed to long-term
growth in the region and exploration success is essential
to the company’s efforts to become a producing operator
in Newfoundland & Labrador.
drill a trio of exploration wells – the Harpoon and Cupids
prospects in the Flemish Pass and the Federation prospect
in the Jeanne d’Arc Basin – starting in the fourth quarter.
Aadland said the company is moving quickly to carry out
work on its exploration licenses.
“For instance, with our Cupid prospect we obtained the
exploration license in January last year, we performed the
seismic survey later the same year, and now we plan to
drill the license in our upcoming campaign. This has been
an impressively fast timeline.”
“
Statoil has an ambitious
exploration program this year
and the coming year.
”
“Statoil has an ambitious exploration program this year
and the coming year.”
In early June, the vessel Geo Caribbean started collecting
3D seismic data over another pair of exploration licenses –
EL 1025 and EL 1026 – acquired in last year’s land sale
by Statoil and partners Chevron Canada and Repsol
E&P Canada. The survey area spans approximately 4,000
square kilometres.
Statoil will use the semi-submersible West Aquarius to
“From Statoil’s perspective, offshore Newfoundland is
Noia News 29
INDUSTRY NEWS ambitious exploration program
highly prospective,” said Aadland. “Over the next three years, we will be drilling
between three and five exploration wells in the Jeanne d’Arc and Flemish Pass, as
well as one appraisal well.”
Aadland also reiterated a message delivered to Noia members in January by
Lars Christian Bacher, president of Statoil Canada, about the use of third-party
production at existing offshore facilities as a way to increase recovery from
nearby fields.
“Through an open and transparent and clear access and tariff system, subsea
tie-back developments and production have become a large part of sustaining
production on the Norwegian shelf,” he said. “We believe that clear, open access rules and transparent processes to gain access to existing infrastructure will
help unlock that value.”
Subsea tiebacks are developed when the resource is too small to justify a
stand-alone project, but is close to the existing production facilities. Husky Energy
developed the province’s first subsea tieback at North Amethyst in 2010.
Norway implemented rules governing third-party access to production facilities in 2006. The regulations provide a framework for negotiation, tariffs and the
third-party use of production facilities among oil and gas companies. n
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30 Noia News
H201-11_iCemDW_NOIA.indd 1
8/2/12 2:58 PM
INDUSTRY NEWS Breaking down barriers to offshore exploration
Breaking
down
barriers to
offshore
exploration
Offshore exploration has a lot to do with quality data, time
and schedule predictability. Pitching ways to increase
exploration off Newfoundland & Labrador was a key
theme in a speech delivered by Jim Keating, Nalcor
Energy’s vice-president of oil and gas, during Play on the
Edge this year.
Keating said the exploration success rate in the NL
offshore is on par with those in the U.K. and Norway.
“But we’re far too under-explored.”
The local offshore industry has worked hard to start
changing this. Keating pointed to the recent decision by
the federal government to exempt seismic vessels from
the provisions of the Coasting Trade Act. Passed in the
House of Commons on June 18, this legislative change
effectively paved the way for more 2D seismic surveys by
international companies.
“Seismic activity is key to driving exploration success.”
Multi-client seismic, also known as spec seismic, is
collected by a survey company that markets and licenses
this data globally to multiple oil and gas companies.
“It’s beneficial to a lot of companies. For E&P companies
– exploration and producing companies – you get access
to high-quality data for a fraction of the cost it would
take to shoot this data exclusively.”
Keating said 75 per cent of 2D data collected globally is
multi-client seismic.
“It lowers the cost, it lowers the barriers.”
Another key step to increasing exploration off Newfoundland
& Labrador, suggested Keating, is rethinking the province’s
“open-door” approach to annual offshore land sales.
These sales auction parcels of seabed to the highest
bidder, giving successful companies the exploration
rights to the parcels.
The parcels are typically nominated by industry, and
Keating said that process can take about three months.
Companies are then invited to bid on the land, a process
that takes about seven months.
“It’s about a 10-month process and it happens fairly regularly.”
Jim Keating, vice-president of oil & gas, Nalcor Energy
Noia News 31
INDUSTRY NEWS Breaking down barriers to offshore exploration
Jim Keating, Nalcor Energy
“
The more rigs you have
working, the more supply
boats you have working, the
more supply and service
people you have working,
it’s a good new story for
everyone. That’s why we
need to foster a highly
competitive and engaged
exploration program.
Elsewhere, Keating said, the open-door process also
includes scheduled land sales that provide three-year or
five-year forecasts of the land that will be available in
future sales. Those forecasts can give new companies a
chance to get a foot in the door.
For many companies, however, it takes more than a year
to get ready to explore a new region. Those preparations
include acquiring 2D seismic data and evaluating that
data to assess a region’s potential.
Keating said increasing the number of companies exploring
for oil and gas off Newfoundland & Labrador has another
added benefit. All that activity produces economies of
scale and reduces costs.
“There’s about three years of activity that an oil company
will typically go through before it is ready to commit to
a particular area.”
“The more rigs you have working, the more supply boats
you have working, the more supply and service people
you have working, it’s a good new story for everyone.
That’s why we need to foster a highly competitive
and engaged exploration program.” n
”
The shorter timeframe can be a barrier to new oil and
gas companies looking to explore new regions.
32 Noia News
“You send a signal to industry as to which lands you’re
going to open.”
A chart in Keating’s presentation compared Newfoundland
& Labrador with nine other offshore jurisdictions – and
all use scheduled exploration licensing rounds. Those
jurisdictions are the U.S., Norway, Australia, the U.K.,
Brazil, India, Nigeria, Angola and Greenland.
“Scheduling is sort of a heads-up. If we don’t provide
that time, if we don’t provide that data, you’re going to
miss the boat, and I think we’ve largely been missing
the boat.”
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709.739.6300
Sandy Martin (L) of Suncor Energy with Noia Board member Bruce Grant and Mark McLeod (R) of Chevron at Noia’s Play on the Edge 2012
Suncor sets the stage for reliability
Suncor Energy has 21 weeks and three major scopes of
maintenance, upgrades and installation work to complete
on both its FPSO and the Terra Nova oilfield.
“The program this summer will set us up for reliable
operations for the years to come,” Sandy Martin, Suncor’s
East Coast vice-president told delegates at the annual
Noia conference in June.
Under the 147-day schedule, production at Terra Nova
would resume in November. It’s the longest shutdown
at the oilfield since the floating production, storage and
offloading vessel was drydocked in the Netherlands in 2006.
The oilfield shutdown began June 8, and the FPSO
arrived June 26 at the Cow Head facility operated by
Peter Kiewit Infrastructure. There, the vessel will undergo
maintenance, along with the installation of a new waterinjection swivel and upgrades to its main power generators.
Replacing subsea infrastructure is the second major
scope of work on Suncor’s to-do list. In the fall of 2010,
the company detected low levels of hydrogen sulphide in
some production wells.
“H2S was not expected during the life of field at Terra
Nova and as a result the flowlines and risers were not
designed for long-term H2S production,” said Martin.
“When H2S was first encountered, we shut in wells that
were showing higher levels of H2S, cutting back …
production throughout 2011 and 2012.”
“We’ll replace a total of more than 20 kilometres of
flexible pipe, including nine risers, nine flowlines and
several jumpers,” said Martin. “Once the H2S-rated lines
are installed and in place we’ll be able to resume production
at full rates.”
Subsea 7 has been contracted to provide two divesupport vessels and a construction vessel to replace the
seabed equipment.
34 Noia News
The third scope of work is the southwest drill centre
satellite well project.
“This is the most recently added scope and it entails
adding a satellite well flowbase and associated equipment in order to provide additional wellslots for access
to untapped sections of the reservoir,” said Martin. “It
addresses the fact that we have used all of the currently
available wellslots.”
Martin said the company wants to draw as much economic
production as possible from the existing fields and to
continue to look for “viable concentric development
opportunities around those assets.”
“Terra Nova production peaked in 2003, and as we move
into 2013 and 2014 we’ll enter a plateau for a period of
five or more years where we expect stable production to
be sustained and while we continue to evaluate growth
potential,” he said.
“To that end, we continue to assess the Terra Nova West
Flank and the Far East, which are concentric growth
opportunities that need more evaluation and more drilling
to confirm their full potential.”
Terra Nova is made up of four distinct geological units,
West Flank, Graben, East Flank and Far East. Drilling is
also on Suncor’s agenda, starting with two wells this year
using the rig Henry Goodrich.
“We could drill anywhere from three to five wells at Terra
Nova in the next two-and-a-half-year period. In fact, a
core strategy for Terra Nova, as well as our non-operated
assets at Hibernia, White Rose and Hebron, is to add
production through concentric, near-field exploration in
satellite developments around the existing assets. The
expansion projects at Hibernia and White Rose are
examples of this approach.” n
A Big Thank You
Photos by: philippephoto.ca
This year’s Event raised $119,000,
78% is going to charity!
Winners! TD Taster’s Choice Award; Choices for Youth. NLLC’s Chef Choice Award; Chinched Bistro.
In Support of Youth Homelessness and Poverty in our Community.
Bacalao
bianca
Presenting Sponsor
for all sences
hinched
Bistro
Gold Sponsor
Silver Sponsors
Special Thanks
Steers Insurance, Woodward Group
of Companies, Fortis, Eastern Audio,
Newfoundland Power, Coffee Matters,
Manna Bakery, Ches’s Fish and Chips,
Wreckhouse Creative, Energy Media Inc.
All donors to the silent & live auction.
Burn survivors Pat Stamp and Peter Clark shared their stories of surviving flash fires at a meeting in St. John’s in June. • L-R: Pat Stamp, Peter Clark and Madonna Stamp
Photo courtesy of Pat and Madonna Stamp.
“I had a gut feeling when I went on board that Thursday that
something wasn’t right and I didn’t know what it was. I couldn’t
put a finger on it,” recalls Pat Stamp.
Learning
from Loss
That Thursday was April 8, 2006, the day a workplace accident
would change his life forever. Stamp was a welder sent to complete
work onboard a shuttle tanker in Conception Bay. Along with
tanker deckhand, Wayne Dalton, Stamp entered tank number
five to begin welding repairs, descending the staircase to the
bottom of the tank some 65 feet below. Men in the adjacent
number six tank were doing repair work on a hydraulic line, a
process which allowed fluids and fumes into number five tank.
“When I struck the arc I felt a hot breeze blow across my throat.
I stood up and I said to Wayne, have you felt anything, and he
said no. I said, I haven’t learned this in a textbook anywhere, but
I’m almost sure this tank is flashed.”
Stamp says he then saw a heat wave about three feet above the
deck traveling ahead of him towards the ladder. The sludge in the
stairway soon ignited. He convinced Dalton that they had to
leave. They began making their way towards the ladder through
intense heat and darkness (the only pocket of light coming from a
16-inch diameter hole above them).
36 Noia News
HSEQ FEATURE Learning from Loss
“I slipped, he ran past me and kept going toward the
ladder. By the time I got to the ladder there was no sign
of Wayne. I took a deep breath, closed my eyes and
started climbing. I ran into Wayne about two thirds up
and I stopped to get a breath of air and I couldn’t. It was
so hot that I felt it burn right down through my system. I
looked behind me to see what was happening. The fire
was just about burned out but the tank was filling with
heavy black smoke. At that time I had no air, I was very
hot and I said, I will die here. I was going to lock my legs
into the rungs of the ladder and I said, they will find me
here. I knew nothing until I ran into Wayne again.”
Dalton told Stamp that he had climbed up too far. Stamp
then realized that there was a landing right at foot level
so he crossed over to go up through the opening and
called to his friend to follow. Unfortunately, Stamp
became stuck in the opening. Dalton decided to go
back down the ladder.
“I yelled up to the men who were standing on the deck
and said, I’m stuck. They never moved. They were just
standing there frozen. I thought for sure that I was going
to be burnt off from the waist down. I couldn’t get out.
And my six month-old grandson appeared about 25 feet
ahead of me. His whole life flashed. I saw my grandkids
grow up. And I pushed as hard as I could and was thrown
out on the deck.”
Believing that he was on fire, Stamp rolled on the deck
and asked those on deck to go help Dalton. They told
him that he was not on fire so he stood up and ran to the
side of the ship, thinking that it was about to explode.
The men then convinced him to go to the first aid room
where Stamp began cutting off his own clothes, exposing
giant blisters on his legs. His welding cap was burnt like
a marshmallow to the top of his head.
Still not realizing the severity of his condition, Stamp
called his wife Madonna to tell her that he was hurt but
was okay and waiting to be airlifted to the hospital in St.
John’s. While waiting for the helicopter to arrive, Stamp
was looking into a mirror watching his face become
green and unrecognizable. Shortly after doctors arrived,
Stamp went into shock. He woke from a drug-induced
coma seven weeks later.
Wayne Dalton’s body was later recovered. He died of
smoke inhalation.
A Transportation Safety Board investigation later revealed
that a combination of factors led to the accident that
claimed Wayne Dalton’s life and left Pat Stamp with
burns to 30-40% of his body. The board says the fire likely
occurred when combustible vapours from the back-flowing
of oil/water mixture that had entered the workspace were
ignited by the welder’s arc.
One Man’s Journey
Like Stamp, Peter Clark knows all too well the devastating
effects of being caught in a flash fire. Clark, Vice President
of Training, Research & Development for Apparel
Solutions International, has a passion for safety stemming
Noia News 37
HSEQ FEATURE Learning from Loss
from his own accident in 1979. Clark says he chose not
to work in the Alberta oil patch at the time because he
thought it was too dangerous.
“So I worked this other job and got burnt from simply
working around this pipeline. I was going down a public
street and there was this huge explosion in front of me
and around me that I had to run out of,” explains Clark.
Surviving the explosion led Clark on a journey to help
other burn survivors and to work tirelessly to prevent future
incidents through public awareness and education. He
soon realized that there were a large number of burn
victims in the Edmonton area so he began to research
the patterns of burns and survival rates.
“
The workforce is a lot
younger now and very well
educated. These young
kids, they’re not saying oh
well, because I work in the
oil patch I may lose a finger,
I may get burned. They want
to protect their friends and
their co-workers and their
families.
”
“So here’s Edmonton with under a million people at the
time that was having 200 severe burns a year roughly to
go through the burn unit. There wasn’t room for them all
in the burn unit, yet no one was really hearing about this.”
says Clark. “I think once people understand that, the
idea of fire resistant clothing makes a lot more sense.”
Clark has devoted much of his life to raising awareness
of the need for proper Personal Protective Equipment
(PPE). The Canadian Centre for Occupational Health &
Safety states that PPE is equipment worn by a worker
to minimize exposure to specific occupational hazards.
Examples of PPE include respirators, gloves, aprons, fall
protection and full body suits, as well as head, eye and
foot protection.
In his current role Clark is responsible for maintaining
the utilization of the current standards, regulations and
specifications for the apparel manufactured by
Apparel Solutions. He says there have been tremendous
advancements in technology over the years which have
allowed development of comfortable, functional, safe
clothing for a variety of work environments.
“Now we’re into really good products that give thermal
insulation and do not ignite. You can still wear them,
they’re breathable and comfortable. Some of those early
products were really difficult to wear. But now we’re really
seeing, with new product development, the acceptance.”
Clark says good safety begins with hazard elimination
through engineering. PPE is the next step. Despite the
evidence that PPE works, Clark says education is still at
the forefront of what he does.
“Some places just don’t have that yet. Without that
they’ll tell you this stuff doesn’t work and therefore
they’re going to fight it. They don’t have the knowledge.
They don’t understand it.”
East Coast Canada
East Coast Canada has been hailed as very progressive
in its efforts to acquire PPE designed to mitigate the
hazards associated with various offshore environments.
Clark’s own burns weren’t consistent with many of the
other burn patterns associated with victims of flash
fires. While most people pointed to the circumstances
of each fire as the reason for the differences, Clark’s
research and work with other burn survivors led him to a
different conclusion.
“There are some people who are really cutting edge
with the products that they want and are willing to try
out. And it’s not just the fire resistant clothing. It’s also
the high visibility gear. People are now also requesting
that clothing be third party certified,” says Clark.
“It kept coming back to the clothing. We were getting
so many incidents that you could start forecasting it,”
Tom Legare, President and CEO of Apparel Solutions,
says they are continually challenged by companies to
38 Noia News
HSEQ FEATURE Learning from Loss
engineer specific PPE solutions. For example, the company
is currently working hard to understand the long-term
effects of working around hazardous chemicals, especially
diesel-based drilling muds. In the oilsands, there is now
a demand for PPE to protect against steam and hot water.
Water repellancy is an important factor offshore.
“We’ve been working for 10 years to find the appropriate
garments for offshore that are waterproof. Along with
water proof often comes melting. So you’re mitigating
one hazard but adding a negative for another hazard,”
explains Legare. “We’re working very hard to find solutions
for water proof, fire resistant clothing that is high visibility.”
While PPE solutions are continually being engineered,
all of these men agree that ongoing education about its
use is critical.
Tom Legare says it’s fortunate that attitudes are changing
and both employers and employees are more proactive
when it comes to safety.
“The workforce is a lot younger now and very well educated.
These young kids, they’re not saying oh well, because I
work in the oil patch I may lose a finger, I may get burned.
They want to protect their friends and their co-workers
and their families. They’re very well educated and there
are a lot of technological advancements that have come
at the expense of the education.”
Pat Stamp and his family have faced a long road to recovery
since his accident. While re-living the incident still causes
him pain, he has decided that speaking about it is worth
it if it helps others. His first public speaking engagement
was at a school in his home town of St. Vincent’s.
Following that, he was asked to speak at a safety
conference in Gander.
“The positive feedback I got from that led me to say
well, I was left here for a reason and what is that reason.
This is what I’m supposed to do, to talk and tell my story
and hopefully prevent another accident from happening.” n
Noia News 39
IN BRIEF The price of crude
The price of crude
Premier Kathy Dunderdale announced July 23 the province
is cutting costs in the face of declining oil prices that could
increase this year’s deficit.
The premier suggested this year’s deficit could almost triple,
reaching as high as $700 million from the earlier budget
forecast of $258 million.
The province forecast the average price of Brent crude at
$124 per barrel during the 2012-13 fiscal year. Instead, crude
averaged about $100 per barrel at the time of Dunderdale’s
cautionary warning. For every $1 the province’s oil forecast
is off, the premier said it takes about $20 million in revenue
out of the provincial treasury.
In August, the Energy Information Administration (EIA) issued
a short-term energy outlook and forecast the average price
for Brent crude at $103 per barrel during the second half of
this year. In 2013, the EIA is forecasting Brent will average of
$100 per barrel. Both price forecasts are higher than those
in the EIA’s July energy outlook.
The EIA is an independent statistical and analytical agency
within the U.S. Department of Energy.
Chevron research chair at MUN
In June, Chevron Canada Ltd. and the Research and Development Corp. of Newfoundland and Labrador announced
a joint $1-million investment in a new research chair at Memorial University. The chair in reservoir characterization is
expected to be filled later this year.
“Research in reservoir characterization aligns well with the needs of Chevron in Atlantic Canada,” stated Mark MacLeod,
Chevron’s Vice-President for Atlantic Canada. “As well, our affiliation with Memorial University and RDC in this manner
is consistent with our objective to be the partner of choice in the region.”
Potential research areas include the determination of reservoir architecture, establishing geological flow units,
using seismic data in the construction of reservoir models and identifying petroleum growth reserve potential. The
chair would focus on some of the geologic uncertainties faced by industry operations in offshore Newfoundland
and Labrador.
The new chair will collaborate with Dr. Lesley James, who was appointed in late 2011 to another Chevron research
chair in petroleum engineering at Memorial.
40 Noia News
IN BRIEF FMC expands in Donovan’s
FMC expands in Donovan’s
Noia member FMC Technologies
is building a 36,000-square-foot
facility in Donovan’s Industrial Park
in Mount Pearl. One-sixth of the
space will go to offices and the
rest to a workshop, clean room
and test pit. Designed as a new
subsea services centre, the facility is scheduled for completion in
the first quarter of 2013. FMC base
manager Gerry Mayo said the new
infrastructure will enable the company to expand its range of services.
FMC arrived in the province in
1998 to build subsea templates,
manifolds and wellheads for the
Terra Nova project and currently
has an assembly and testing facility
in downtown St. John’s.
New post for Skinner
Former provincial cabinet minister Shawn Skinner joined Shoal Point Energy’s six-person board of directors June 19.
Shoal Point Energy and its partners are currently exploring the Green Point oil-in-shale play in Port au Port Bay. The
company also has a farm-in agreement with Ptarmigan Energy in an exploration licence off Western Newfoundland
and a natural gas play in New Brunswick.
“This is an exciting company which has demonstrated the potential for a world-class oil deposit,” stated Skinner.
“It is exciting to get involved on the ground floor of the development of such a large, unconventional oil resource.
This could be a real game changer for the people of Newfoundland & Labrador.”
George Langdon, president of Shoal Point, praised the former minister of natural resources. “His history of distinguished service combined with his knowledge of political and regulatory processes will prove of enormous value
to the company as it works with the people of Newfoundland & Labrador and of Canada to develop this resource.”
Noia News 41
CONFERENCE
2012
KEYNOTE
LUNCHEON
GOLD
PLATINUM
www.noiaconference.com
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