With the Newfoundland and Labrador Oil and Gas Industries Association (Noia)
Newfoundland and Labrador’s first oil and gas well was drilled in 1966 and within a decade came a flurry of oil and gas exploration that lasted into the mid-1980s. It was during this period of high activity, in 1977, that the Newfoundland and Labrador Oil and Gas Industries Association (Noia) was founded to connect local businesses with emerging opportunities in the industry. Today, Noia is the largest offshore petroleum association in Canada – over 620 members strong – with a mission to promote development of East Coast Canada’s hydrocarbon resources and to facilitate its membership’s participation in global oil and gas industries. Members include local companies, many companies from other parts of Canada, and a signifi cant international membership, signifying the global scope of the province’s oil and gas industry.
Noia provides a range of invaluable services to its members, from advocacy and industry promotion to business information and networking opportunities and events, such as its widely-attended annual conference. Included in its valuable services is the distribution of timely industry updates through The Daily Barrel, an email bulletin issued directly to members each day, detailing local, national and international industry news, expressions of interest, and a host of other relevant information.
Noia also facilitates information sessions between oil and gas operators and local suppliers and service providers, as well as hosts its Play on the Edge conference every June in St. John’s, Newfoundland and Labrador’s capital city. The event, which has been running for over thirty years, is the premium oil and gas conference in Canada and regularly attracts around 1,200 participants, including delegates from oil and gas jurisdictions all over the world.
“We look at topics related to harsh environments, we look at broader social issues like social license, and we take a broad look at the industry from a geopolitical perspective,” says Bob Cadigan, Noia’s President & CEO. “All the things you need to know as a business leader in order to operate in what truly is an international business.” Legislative issues have never been far from the conversation and Noia has played a key role in lobbying Government for change where it is deemed necessary. One such matter was that of legislative impediments to oil and gas exploration in Canadian waters. Due to legislation limiting access for seismic vessels, these waters were vastly underexplored, particularly off the shores of Newfoundland and Labrador.
Seismic data is critical for oil and gas companies interested in looking at the potential of an area for development; however, legislation meant that operators of these vessels were unable to collect the data, which is captured and then made available for sale to interested parties. This meant that in the critical period of the mid-1980s up until recent years, no multi-company seismic data was collected in Canadian, and Newfoundland and Labrador waters.
“This has really held back the Newfoundland and Labrador offshore and the Canadian offshore industry in general for the last fifteen to twenty years,” says Cadigan. “Noia, the Province and others have lobbied hard.” The hard work paid off as, in 2010, the Government of Canada made a change to allow seismic vessels practically unfettered access to Canadian waters, ushering in a period that is seeing some very large seismic programs getting underway to fi nally collect this much needed data.
One such initiative, started three years ago, is a joint venture between Newfoundland and Labrador’s power company, Nalcor Energy; Petroleum Geo-Services (PGS), an operator of seismic vessels; and TGS, a company that deals with the sale of the data to interested oil and gas operators. This initiative garnered international attention as the largest discovery of its kind in 2013 and has opened up a whole new area for further exploration and development.
“We will have a library of data available that will run from the northern tip of Labrador, right down to the Grand Banks and across the boundary with Nova Scotia, the boundary with Quebec and the Gulf of St. Lawrence,” says Cadigan. “So we’ll have one of the largest, most modern pools of seismic data available and that is a critical ingredient.” “We are now an area that international operators are looking at investing in. They will invest and we will see a renaissance of exploration in Newfoundland and Labrador.” In a recent land sale, include price one of the existing operators in the Newfoundland and Labrador offshore, ExxonMobil, bid on a parcel of exploration land in the Carson Basin, one of the previously unexplored areas that this new legislation has opened up. Noia sees this as a leading edge indicator of the kind of global attention that is beginning to be seen in the province.
Attention is also being cast even further north, to unexplored and potentially lucrative regions in the Arctic, and Newfoundland and Labrador’s rich heritage of oil and gas experience in harsh conditions positions the province as an ideal Path to the ArcticTM. The province already has three major projects under its belt in the form of Hibernia (fi rst oil 1997), Terra Nova (first oil 2002), and White Rose (fi rst oil 2005), with Hebron (first oil planned for 2017) set to soon make it four. These operations have helped to grow Newfoundland and Labrador’s capabilities significantly over the past twenty-plus years, particularly as it relates to operating in cold, harsh and ice-prone environments.
“When Hibernia was built, or when the project was envisaged, there were skeptics as to whether you could produce oil in an environment that had seasonal sea ice, the fog, the sea states,” says Cadigan. “We were a frontier, at the absolute edge of what’s possible in terms of producing oil and gas in a harsh environment.
“It has led to us being, really, thirty years ahead of the rest of the world in terms of producing oil in a harsh environment that has many similar conditions to those that exist in the Arctic.” The 2008 fi ndings of the United States Geological Survey (USGS) greatly ramped up interest in the Arctic, identifying 1670 trillion cubic feet of natural gas, 44 billion barrels of natural gas liquids and 90 billion barrels of oil yet to be discovered in Arctic waters.
“This is where about 25 per cent of the world’s remaining oil and gas resources are located,” explains Cadigan. “So, I think we were lucky in that with the discovery of Hibernia in 1979, and fi rst oil in 1997, we were substantially earlier than rest of world in terms of dealing with Arctic-like conditions. We have a head start and that’s a positive thing.” The Hibernia platform was the fi rst of its kind, designed to withstand the impact of a one million tonne iceberg and the considerable forces of pack ice. Terra Nova brought about innovations such as a disconnectable turret that could be moved out of the way of incoming sea ice, and subsea excavations that protect subsea equipment from iceberg scour. Meanwhile, the soon-to-be operational Hebron platform will become one of the world’s biggest float-over operations. These are all examples of innovations made directly because of the Arctic-like conditions found in Newfoundland and Labrador’s offshore.
“We were the innovators, we have a lead in terms of the thinking, we’ve done a lot of research, and we have a lot of companies that have fi gured out how to deal with these issues,” says Cadigan. “They are world leading, world class, and will be called upon for many of the challenges as oil and gas companies start to move in.” Newfoundland and Labrador is the World’s Cold Ocean Laboratory TM . During the winter season (December to March), winds can reach 90 to 100 knots offshore – hurricane force. Sea ice, up to 100 centimetres thick, may reach the area from February to April, two to three years out of every ten. Icebergs pass through the area from March to July. Fog from April to August can reduce visibility and impact crew changes by helicopter. Air temperatures can dip to minus-18.5°C.
Living and working for generations in these challenging conditions has given rise to a great amount of expertise and innovation. Newfoundland and Labrador is known worldwide for its expertise in ice engineering, surveillance and management. Its capabilities have evolved to include remote logistics; geotechnical, ocean and environmental engineering; marine meteorological services; safety and training; and many more.
St. John’s is home to a cluster of private sector ocean technology companies, public institutions, and R&D infrastructure. Applied research and development in ocean mapping, ocean observation systems, ocean instrumentation, and ocean intervention is ongoing and the province’s Marine Institute is home to the most comprehensive suite of marine simulation capabilities in North America, and possibly the world.
2014 was a typically active year for Newfoundland and Labrador in the oil and gas sector. Nalcor began working with Airbus Defence and Space to map oil slicks originating from the seabed on the surface of the ocean using satellite imagery.
Nalcor also partnered with Ikon Science Canada to release a comprehensive regional pore pressure study for offshore Newfoundland and Labrador to the global oil and gas industry. The first large-scale study of its kind for offshore Newfoundland and Labrador, it is a comprehensive evaluation of the subsurface pressure systems in the province’s eastern frontier slope and deep-water basins. The study region spans an offshore area from northern Labrador to the Flemish Pass in the south, including the newly discovered Chidley, Henley and Holten basins in the Labrador Sea.
Meanwhile, EMGS (Electromagnetic GeoServices) Canada embarked upon a non-exclusive, four-year electromagnetic data acquisition campaign covering a 41,000 sq. km area from northeast Newfoundland to the Southern Grand Banks.
This activity is in addition to the continuous work being carried out on a daily basis in the province, which involves some truly world-leading companies that are counted among Noia’s membership.
• Provincial Aerospace (PAL) is a world leader in maritime surveillance with over 165,000 hours of airborne operations, working on projects in thirty countries globally, specializing in ice management support, iceberg detection and reconnaissance, environmental observation and reporting, oceanographic measurements, and weather forecasting.
• Virtual Marine Technologies (VMT) was incorporated in 2004 and emerged from collaboration between the oil and gas industry, Memorial University and the National Research Council, in recognition of the importance of safety and survival training, and emergency preparedness to support the growth of the oil and gas industry. VMT’s roots remain tied to the Newfoundland and Labrador offshore, but it has broadened its focus to apply its maritime simulation expertise to meet the needs of a growing number of other global industries.
• Rutter Inc. has evolved from being the world’s largest supplier of voyage data recorders to now supplying fully integrated radar-based systems for oil and gas exploration and production, as well as security and surveillance applications.
• GRI Simulations was established in 1986 to provide support for ROV (Remote Operated Vehicle) system development. Since 1997, the company has focused on supporting subsea ROV operations by providing simulation technology to enhance pilot training, mission planning, and rehearsal for offshore oil construction and production operations.
• Northern Radar, much like PAL, focuses on maritime surveillance, including search and navigation equipment for tracking ships, icebergs, sea ice and low-flying aircraft.
• Oceans Limited was incorporated in 1981 to carry out applied research in oceanography. The company has conducted a variety of research activities, including search and rescue field trials, detection of objects at sea, oceanographic data collection, and analysis of waves, currents and ocean circulation.
This is just the tip of the iceberg in terms of the variety of skills and knowledge that has both paved the way for, and evolved thanks to, the great success of Newfoundland and Labrador’s offshore petroleum industry, which is the largest contributor to the provincial GDP, at around 33 per cent.
With oil production value of over $8 billion, the royalty revenues for 2012 alone amounted to $2 billion, and three new basins were announced last year, covering an area the size of the Gulf of Mexico, along with significant finds beyond the northern tip of Greenland and in Statoil’s Bay du Nord prospect.
Nalcor continues to conduct seismic work in northern waters, with more than 50,000 line km completed since 2011, and a 2014 extension to acquire an additional 30,000 line km of data in the Labrador Sea, Northeast Newfoundland Shelf, Flemish Pass and the southeast Grand Banks. Surveys could continue until 2018.
Put simply, the province has had great success in operating offshore in cold, harsh and ice-prone environments and is ideally equipped to assist in a new era of oil and gas exploration and operations.
“The environment we have here has a lot of the same characteristics as the Arctic, and we’re a perfect incubator and proving ground for the technologies that will be necessary to move oil and gas exploration and development into the Arctic,” says Cadigan.
While exploration and development in the Arctic is not something we are likely to see for some time, the signs are that it is a case of not ‘if’, but ‘when’.
“I think we’re in a world where there are a number of pieces that have to be sorted out before exploration and development begin in the Arctic,” says Cadigan. “Social license, the people adjacent to the resources, particularly indigenous peoples in the north, particularly the Inuit, they need to decide when they are ready to see exploration and activity in the lands they have used for centuries, so certainly social license in as an issue that needs to be addressed.
“We believe that, over time, the opportunities for well-paying jobs and opportunities for indigenous businesses will help and we’ll see the social license evolve in the Arctic.” For all the challenges that come with exploration and development in the Arctic, Newfoundland and Labrador is poised and ready to provide the solutions.
Its strong ocean technology cluster, composed of public R&D facilities and private sector companies, is a natural evolution for a people that has traditionally derived its living from the sea and possesses skill sets that transcend generations and ocean sectors. Add to this the province’s deep cultural connections with Aboriginal peoples, its cold ocean and near-Arctic conditions, and its strategic location along international shipping lanes and northern sea routes, and you have the ideal cold ocean laboratory and Path to the ArcticTM.
“We are uniquely positioned because we’re far enough south and some of the conditions are sporadic, whereas in the Arctic they are continuous, so it makes us an absolutely perfect proving ground,” says Cadigan.
“The other thing we see is the investment the oil companies are making here to take advantage of the bright minds; the core base of knowledge and the facilities we have.
“We have not only the heritage and a part in developing some unique technology; we have the core knowledge, we have continuous research, and we’ve demonstrated that we have the entrepreneurs that are needed to take an idea that might help to commercialization. We have enablers like the Atlantic Canada Opportunities Agency (ACOA) and the Government of Newfoundland and Labrador…We’ve got a lot of things going for us.”
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