Industry abuzz about BP well being drilled off Newfoundland this summer

ST. JOHN’S, N.L. — A recent article by international energy news website Oilprice.com lists an offshore Newfoundland exploration project among the Top 5 in the world most likely to “shake up the market” in 2023 and beyond.

The story by Gerald Jansen, an independent freelance energy analyst based in Rotterdam, the Netherlands, includes the Cape Freels prospect, which is about 400 kilometres off Newfoundland and Labrador’s east coast in the West Orphan Basin.

Oil company giant BP is set to have the initial exploration well called Ephesus drilled at the site this summer. The location is in deep water, about 1,250 metres.

“The Cape Freels exploration well has been the talk of the town for quite some time, Eastern Canada’s oilmen have been mulling over its frontier-opening possibilities at least since 2019,” the article states.

“The Cape Freels prospect … was initially assumed to hold four to five billion barrels of oil and gas, potentially double in size to the similarly offshore Hibernia field, the geographically closest producing unit.”

Longtime Newfoundland and Labrador offshore oil industry consultant Rob Strong agreed there is significant interest in the BP well.

While seismic work done in the last four or five years has been interpreted as very positive, he said, the real proof can only come through drilling.

“You don’t know until you drill the well. Seismic can look as good as possible and could be a gas gap, water gap, so you really have to drill the well,” Strong said. “(BP) has hired a rig and they are going to be here in March or April of this year, and they are going to drill it.

“In the context of excitement, it should be very exciting, but what will the federal government’s position be if indeed they do come up with a sizeable field? That’s the $64,000 question.”

Bay du Nord

In April 2022, the federal government released Equinor’s massive Bay du Nord offshore development project from the environmental assessment process, paving the way for the project to proceed if Equinor wishes.

Equinor Canada has stated that a final investment decision could take place within a couple of years. If the project is sanctioned, first oil could be achieved as early as 2028. Bay du Nord’s reserve estimate is up to one billion barrels.

Last April’s decision was met with much criticism from environmental groups that said Canada has abandoned its responsibility to be climate leaders.

Environment and Climate Change Minister Steven Guilbeault told national media in 2022 year-end interviews that Bay du Nord was the most difficult decision he had to make.

Strong said he wonders what that signals for future projects, such as a potential Cape Freels. He said the world still needs oil, and will for another 30 to 40 years.

“Some will argue that Bay du Nord is the new standard, the federal government approved it based upon a whole whack of recommendations, so would the federal government approve Ephesus, or Cape Freels, under the same circumstances?” Strong said. “The feds sort of indicated Bay du Nord might be the last one approved and yet BP is going to spend $50 to $100 million drilling a new well on a new structure, and you don’t drill wells unless you are hoping to find something you are hoping to produce.”