| Economic Research & Analysis—Publications |
|
| Back to: Contents | Economic Research | Finance | Main Government |
 |
| The Economy 2004- Newfoundland and Labrador |
|
| previous | next |
Oil and Gas |
| Oil Production Performance |
 SeaRose FPSO Photo Credit: Husky Energy
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Oil production grew by 17.9% to almost 123.0 million barrels in 2003. High prices, combined with regulatory approvals for daily production increases, led to significantly higher production levels at both Hibernia and Terra Nova. Hibernia production has increased every year since the start of production rising from 23.8 million barrels in 1998 (first full year) to a record 74.1 million barrels in 2003. Production from Terra Nova has also been strong in the first two years of operations increasing from 38.5 million barrels in 2002 to 48.8 million barrels last year. Production is expected to decline in 2004 and 2005—over time, more production wells will experience increased water and gas production leading to a reduction in oil recovery from the field. Development of the Far East field is expected to offset this natural decline for one or two years, starting in 2006. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
New Field in Production in 2006 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Substantial progress was made on the White Rose project in 2003. Glory hole work at the field was completed in September and field development drilling commenced in the third quarter. The recently christened
SeaRose FPSO departed from South Korea on February 12 and is expected to arrive in Marystown in April for topsides installation, hook up and commissioning. Work in 2004 will be primarily associated with continued drilling of development wells, field integration of the subsea production system, and topsides construction and integration on the FPSO. The project operator, Husky Energy, expects production to begin late 2005 or early 2006. This production coupled with expected record Terra Nova production, will push total annual output to over 150 million barrels in 2006. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Contribution to the Provincial Economy |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The oil and gas sector is a substantial contributor to the economy. Direct employment in 2003 was an estimated 2,600, accounting for 1.2% of total employment. The sector accounted for approximately $200 million of labour income (2.7% of total) and about 18% of total GDP. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Exploration |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Significant interest exists in the province's offshore. This is evidenced by the participation of some of the world's largest oil companies in offshore exploration and development activity. The more notable companies doing business are
ExxonMobil, ChevronTexaco and ConocoPhillips. Canadian companies also have significant stakes in the province's offshore including Petro-Canada, Husky Energy and Imperial Oil Resources Limited. Petro-Canada has a 20% or greater share in all four of the province's major oil projects, and is involved in 22 out of the 23 significant discovery areas designated in Newfoundland and Labrador waters. Revenue from East Coast properties accounted for over 35% of Petro-Canada's net earnings in 2003. There was a record land sale in 2003. All eight parcels that received successful bids were jointly purchased by ExxonMobil (25%), ChevronTexaco (50%) and Imperial Oil (25%). Almost $673 million in work expenditures were committed, bringing total outstanding work commitments in the offshore to $968.5 million. These commitments are spread over 36 licences which have varying expiry dates spanning the next five to six years. As a result, the province could see as many as 10 wells drilled over the next several years. Husky Energy has announced its intention to drill one offshore exploration well in the South Whale Basin in 2004. Onshore, Contact Exploration Inc. and partners commenced drilling an exploratory well in the Parsons Pond area in late January, with project costs estimated at $1.2 million. Vulcan Minerals Inc., a partner in the Parsons Pond #1 well, is conducting completion and stimulation operations at its Flat Bay #1 well with intentions to drill one or two additional wells on its properties later this year. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Kiewit Offshore Services—Marystown Photo Credit: Husky Energy |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| previous | next |
| back
to contents |
|
|
|
| This information was current as of March 16, 2004. | |
|
|
| [Government Home | Finance Home | Economic Research & Analysis Home | Disclaimer] | 
|
