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Newfoundland and Labrador may be Canada’s fastest growing province this year, but its stellar rise masks a dramatic decline in the oil sector. The province’s three major offshore fields: Hibernia (1.24 billion barrels of reserves), Terra Nova (419 million barrels), and White Rose (283 million ) are past their best and production from new fields is years away.
“We are past peak production from the three existing fields,” the province’s Minister of Natural Resources Tom Marshall told the Financial Post. “We need exploration and success from that in order to sustain and grow the economy further.”
Newfoundland is one of the last few great, untapped offshore developments in North America. Oil majors including ExxonMobil Inc. and Chevron Corp. have a presence in the area, but the region has been a backwater as the prolific Gulf of Mexico and North Sea continue to garner all the attention.
Alarmed by continued neglect from oil companies, the Newfoundland government is casting its net wider to attract bigger players. Last month Mr. Marshall was in China to meet CNOOC and Sinopec officials to drum up interest in the province’s offshore riches.
Nalcor Energy, the province’s energy company, is also collecting seismic data to provide prospecting companies with a feel of the hydrocarbon riches buried deep off the coast.
“There are a number of large oil companies that are not represented in our offshore, and we would like to attract them here,” Mr. Marshall said in a telephone interview from St. John’s. “We are getting three to four exploratory wells a year, and we would like to see more.”
Crude production, which accounts for a third of the province’s GDP, fell from 370,000 bpd in 2007 to 266,000 bpd in 2011. Last year, production fell below 200,000 bpd due to maintenance shutdowns, contracting GDP by 4.8% in the process.
Output was down by a further 4.7% in the first five months of the year compared to the same period last year, suggesting the industry’s problems are chronic.
For now, St. John’s is a veritable economic beehive and is set to emerge as Canada’s fastest growing city, with growth topping 5%, according to the Conference Board of Canada.
Work at the Muskrat Falls hydroelectric project is under way, while Come by Chance, the province’s sole refinery, is set to boost production after de-bottlenecking investments last year.
Despite the proliferation of onshore plays across North America, Canada’s easternmost province remains on the radar, with companies like Statoil SA seeing shades of the Norwegian shelf off Newfoundland.
For the rest of this column, click here: http://business.financialpost.com/2013/08/08/canadas-north-sea-seeks-investors-to-arrest-production-decline/?__lsa=64c2-ed1b