In 2009, Newfoundland and Labrador celebrated the production of its billionth barrel of oil. Given the ventures the eastern Canadian province has in progress, that may be just one landmark of many to come.

The biggest news of late is the offshore Mizzen O-16, a well that delighted explorers worldwide early last year. The wildcat was the first significant discovery in the remote Flemish Pass Basin, located in deep waters far offshore the province.

The well was drilled by Norwegian operator Statoil in 1,095 meters of water, in the midst of a fearsome North Atlantic winter. The basin, one of several Mesozoic rift basins associated with the formation of the North Atlantic, lies some 400 kilometers east of St. John’s. While the Flemish Pass contains similar source and reservoir rocks to the prolific Jeanne d’Arc Basin—home to production from mega-fields Hibernia, Terra Nova and White Rose—Flemish Pass water depths are much greater.

The Mizzen wildcat reached a total depth of 3,756 meters. It was drilled close to Mizzen L-11, a 2003 test that encountered oil shows, and one of only a handful of tests ever attempted in the frontier area.
Perhaps it required a staunch Norwegian operator, schooled in the harsh conditions of the Bering and Norwegian seas of its home country, to bring in the find. In February 2010, the new Mizzen was issued a significant discovery license by the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB), marking the first such license offshore eastern Canada outside of the Jeanne d’Arc Basin.

Now, another high-profile test is drilling in the Laurentian Basin, south of Newfoundland. ConocoPhillips spudded its East Wolverine G-37 in November 2009 on Exploration License 1087R. To say this is a rank wildcat is an understatement: this past summer, the company and its partner, BHP Billiton, won two blocks in the Laurentian Basin. It was the first time the C-NLOPB had a call for bids in the region since the agency was established in 1986. The pair of explorers spent C$9 million on 364,000 hectares in that sale.

There’s also activity afoot in proven areas in the Jeanne d’Arc. Long-time Canadian operator Husky Energy Inc. recently found more oil at White Rose. Its North Amethyst E-17 hit 55 meters of net pay in a new Hibernia formation interval, adding about 60 million barrels of in-place resources to the total at White Rose. Happily, the separate White Rose expansion project is projected to come onstream shortly, and Husky says its facilities will likely be a good fit for producing this latest discovery as well.

Piling on positive news, the provincial government just signed an agreement to join with industry partners to develop a southern extension to Hibernia Field.

The deal calls for the province, through its subsidiary, Nalcor Energy, to pay C$30 million for a 10% equity stake in Hibernia’s southern extension. The development, which will employ a subsea tieback, is expected to prolong production from the main field by five years.

The deal solidifies a memorandum of understanding reached between the parties last summer, and it marks the resolution of a years-long squabble over costs and royalty payments. The province will now receive “super” royalties on the field extension, capped at a maximum of 50%.

Meanwhile, pre-FEED work at Hebron, the province’s fourth offshore development, is finally under way. Hebron, which holds 580 million barrels of oil, is second in size only to 1.2-billion-barrel Hibernia in Canada’s offshore.

Hebron is also being developed with equity participation by Nalcor and under a new “super” royalty structure. A similar agreement covers the expansion to White Rose Field noted above.

Finally, onshore work is also ongoing in western Newfoundland. Nalcor Energy has spudded the first well of a three-well exploratory program at Parsons Pond. The government-owned company has said it hopes that its tests will entice more firms to become active in the area.

Nalcor Energy holds 67% gross working interest in three onshore exploration permits that comprise 103,000 acres. Its partners are Leprechaun Resources Ltd., Deer Lake Oil and Gas Inc., Investcan Energy Corp. and Vulcan Minerals Inc.