The field is located approximately 350 kilometres east southeast of St. John's, Newfoundland, 35 kilometres southeast of the Hibernia oil field, in 19 to 100 metres of water. The Canada-Newfoundland Offshore Petroleum Board, (C-NOPB), estimates recoverable oil reserves in the field at about 400 million barrels. The oil is light, sweet crude, similar to Hibernia oil.
The Terra Nova field is held under five different Significant Discovery Licenses (SDLs). The five major owners in four of them are currently sharing pre-development costs in the percentages outlined below. These five companies are the project proponents.
The first exploration well, K-08, and five of the eight delineation wells (K-07, C-09, I-97, H-99 and E-79) have been drilled into the Graben and East Flank identifying five major and two minor oil bearing sands within the structure. The reservoir units cover an extensive area and exhibit high productivity. The Far East block has not been tested by drilling but, based on the interpretation of seismic data, the proponents estimate it may contain as much as 100 million barrels of recoverable oil.
A floating production system can be built at a reasonable cost and in a short time frame. It will meet the high safety and environmental standards of the proponents and the C-NOPB.
The project is currently in the development plan preparation and pre-engineering phases. During this time, the proponents will work with contractor alliances to evaluate the production system options. Final selection of the preferred production system would occur in late 1996- early 1997.
Floating production systems have two basic configurations: semi-submersible and ship-shaped. From technical, environmental, and safety perspectives, either configuration is suitable for the development of Terra Nova, so the choice of system will be based principally on economic considerations.
Wells will be drilled from separate, conventional offshore drilling units.
The wells will be located in cased "glory holes" or a similar concept, below the sea bed, to protect them from icebergs which may ground themselves on the sea floor. A cased glory hole is a protective cylinder approximately 7 metres in diameter and 10 metres long. The wells are connected to manifolds on the ocean floor, and from there the oil will flow through the pipelines to a riser base manifold below the production vessel and then upwards through flexible pipes called risers to the production facility on the ocean surface. These subsea lines and equipment will be equipped with emergency shutdown valves. They will also be designed so that the oil they contain can be safely removed.
The Terra Nova field is located in an area which is exposed to the seasonal presence of icebergs. Since 1966, the oil industry has been operating under these conditions on the Grand Banks, and has developed techniques and procedures for working safely there. Systems for the detection, monitoring and management of icebergs-including towing techniques-have been developed and will be enhanced. The ice management system will give operations personnel sufficient notification of any need for the floating production system or drilling units to disconnect their moorings and risers, providing for an orderly and controlled move out of harm's way.
The number and location of wells in the Far East block will be determined after delineation drilling of the block.
The oil will be off-loaded from the production facility to tankers which will transport the crude oil to markets. The tankers will be ice-strengthened and have double bottoms, double hulls and advanced navigation and communication equipment. The number and size of tankers will depend on the location of markets for the crude oil.
The facility will be designed with a maximum capacity of 125,000 barrels of oil per day, and average annual production at peak is anticipated to be 100,000 barrels per day. The estimated life of the field ranges between 15 and 20 years.
One option to develop the project is through a contractor alliance arrangement. In this arrangement, contracting and supply companies work together to provide major components or the entire production system. This approach offers benefits to both owners and contracting companies, and is the trend in the development of offshore projects worldwide. Opportunities for Newfoundland and other Canadian companies to participate in such an alliance will keep them in the forefront of contracting approaches.
During the Development Plan Application (DPA) phase, the project proponents will prepare the necessary documents for submission to the C-NOPB. They will also conduct issue identification meetings in areas affected by the project and finalize fiscal and benefits terms with governments. The decision to file the Development Plan Application with C-NOPB will make the beginning of the public and regulatory review of the project.
Concurrent with the C-NOPB review, sufficient pre-engineering will be undertaken to finalize the development concept. This work will permit the project to proceed as quickly as possible after C-NOPB approval. The execution phase activities include detailed design and engineering, Procurement, construction and pre-development drilling to allow first oil by 2001 or earlier.
So far, approximately $25 million has been spend on the development studies along with about $375 million in exploration for and delineation of the Terra Nova reserves. Pre-production development costs for the project, excluding the costs of tankers, will be under $2 billion. Expenditures for capital and operating costs through the producing life of the field could range from$3-$4 billion excluding transportation costs.
The Terra Nova project will build upon Petro-Canada's, and the other owners', considerable operating experience in the unique environment of the Grand Banks to ensure safe and environmentally sound operations. The presence of other production facilities and drilling operations will benefit all personnel working offshore in the Grand Banks.
Over its life, The Terra Nova project will create significant benefits for Canada generally and for the province of Newfoundland and Labrador in particular. The project will be managed from an office in St. John's Newfoundland. While the level and nature of the activities occurring at this office will vary as the project proceeds through its various phases, overall activities will include project management, procurement, geoscience activity, reservoir engineering, drilling operations, logistics, producing operations and project communications.
As well as pre-production employment opportunities, it is currently estimated that as many as 400 to 500 people could be employed directly on the project during the years of peak drilling activity. Substantial indirect employment will also be generated. In order to enhance the level of employment participation in the project by Newfoundland residents, Petro-Canada will give first consideration to residents of the province for training and employment on the project. Petro-Canada will also develop career development models to ensure that they have the opportunity to assume increasingly senior positions as the project proceeds.
The supply of goods and services to the project will be based on the competitiveness of suppliers in terms of price, quality, delivery and Canada/Newfoundland benefits. Along with technical and commercial considerations, Newfoundland benefits will be one of the key factors in awarding project contract.
In order to ensure that Canadian and Newfoundland contractors and suppliers are provided a full and fair opportunity to participate on a competitive basis in the supply of goods and services to the project, Petro-Canada will provide early identification of opportunities for the supply of goods and services required by the project, work with governments and industry organizations to jointly identify potential Newfoundland suppliers of required goods and services and to improve Newfoundland supply capability, and encourage the use of Newfoundland's existing construction, fabrication and assembly infrastructure.
With both Hibernia and Terra Nova on production, it is expected that a substantial offshore operations support industry will be developed in Newfoundland.
In addition to the production facility and tankers, the Terra Nova development will require chartered or leased vessels and facilities including:
Location: 350 km ESE of St. John's, 35 km SE of Hibernia Discovery: 1984 Water Depth: 90 to 100 m Delineation wells: 8 Areal Extent of Graben and East Flank: 40+ square km Reservoir depth: 3200 m - 3700 m Well test rates: 5,000 to 30,000 barrels/day Gas oil ratio: 750 standard cubic feet/barrel API Gravity: 32-34 degrees Producing formation: Jeanne d'Arc Formation Reservoir character: High permeability sandstone Reserves estimate: 300-400 million barrels
Oil production: 125,000 barrels/day (20,000 cubic m/d) Total Fluids: 200,000 barrels/day (32,000 cubic m/d) Gas injection: 80 million standard cubic beet/day (2.25M cubic m/d) Water injection: 240,000 barrels/day (38,000 cubic m/d)
