Shell Fails to Hit Oil Offshore Canada

Published at 05:11PM - 21/09/16

Royal Dutch Shell has failed to find any commercially viable hydrocarbons at its first exploration well offshore Canada.

The supermajor has finished drilling the first exploration well in the Shelburne basin in Nova Scotia, but it was proved non-commercial.

“As a result, in the third quarter of 2016, Suncor will write off its share of the cost of the well which, under the commercial terms of Suncor’s farm-in agreement, is expected to be approximately US$105 million (£80.87 million), after tax,” Suncor Energy, one of the partners in the project, said in a statement.

Shell Fails to Hit Oil Offshore Canada

The Shelburne basin deep water exploration project is located approximately 250 kilometres (155.34 miles) offshore, south of Halifax.

Shell had submitted a bid for the area in 2012 and the project received an approval in June 2015.

The initial phase of the company’s exploration campaign, valued at US$1 billion (£770 million) involved drilling two exploration wells.

Shell Fails to Hit Oil Offshore Canada
Stena Drilling’s Icemax Ultra Deepwater Drillship

Shell was using the Stena Drilling-operated Stena IceMAX drillship at its Shelburne Basin exploration programme.

The dynamically positioned mobile offshore drilling unit suited to the North Atlantic environment and deep water depths had arrived at the location in October 2015.

Stena Drilling Icemax Continues to Operate Offshore Canada

The project involves Shell Canada as the operator, with a 50% interest, with co-venturers ConocoPhillips Canada East Coast Partnership (30%) and Suncor Energy (20%).

The deep water drilling programme involves six exploration licenses with the purpose to determine the potential presence of hydrocarbons in a geographical area known as the southwest Scotian shelf, in water depths ranging from 1,500 to 3,500 metres (4,921 to 11,482 feet).

Shell drilled the first well in October 2015, the Cheshire well.

In March, the development suffered an incident, after a pipe from a rig conducting oil and gas fell to the ocean floor, while crews were preparing for the upcoming storm.

The Stena Icemax was able to successfully disconnect from the well in advance and there were no injuries caused.