Offshore oil operators Husky Energy, Norsk Hydro Canada announce oil discovery

Offshore oil operators Husky Energy, Norsk Hydro Canada announce oil discovery

Husky Energy Inc. and Norsk Hydro Canada Oil & Gas say they have found new energy deposits near the Terra Nova oilfield off the East Coast.

Calgary-based Husky and Norwegian-owned Norsk Hydro said late Tuesday that offshore drilling in the Jeanne d’Arc Basin off the coast of Newfoundland and Labrador had found hydrocarbons near Terra Nova, Canada’s second major offshore field after Hibernia.

The companies said the West Bonne Bay F-12 well is about 320 kilometres southeast of St. John’s. Under a farm-in agreement with Norsk Hydro, Husky drilled the well to a depth of 4,666 metres and also drilled a sidetrack well to determine the size of the oil reservoir.

Both wells showed energy deposits in the Upper Hibernia formation, the companies said. Further analysis is continuing to estimate the size of the energy deposit or if it’s big enough to support commercial production.

“Norsk Hydro is very satisfied with the drilling operation, and the co-operation with Husky,” said Johan Mikkelsen, president of Norsk Hydro Canada. “We are encouraged by the result and will evaluate the find further to see if this can be developed commercially.”

Husky is one of Canada’s major integrated oil companies, with conventional production in western Canada, an oilsands project in northern Alberta, operations in the South China Sea and a string of gasoline stations in the West.

The company is controlled by Hong Kong billionaire Li Ka-shing.

Husky is also growing rapidly off the East Coast, where it operates the White Rose offshore project and is a partner with Petro-Canada (TSX:PCA) in the Terra Nova and White Rose fields.

“The offshore East Coast of Canada is a strategic growth area for Husky,” said chief executive John Lau. “The opportunity to complete a farm-in arrangement with Norsk Hydro and the result of the drilling have further strengthened our portfolio in the Jeanne d’Arc Basin.”

Husky holds a 72.5 per cent working interest in the White Rose project, while Petro-Canada owns the remaining 27.5 per cent. The field currently produces 110,000 barrels of oil a day and is expected to increase that total to 125,000 barrels.

At Terra Nova, where Husky holds about 12.5 per cent and Petro-Canada 34 per cent, production is expected to average about 33,000 barrels in the fourth quarter after lengthy production delays this year.

The field was shut down this spring after the failure of a power generator but has peak production targets of more than 100,000 barrels of oil a day.

At Hibernia, production averages about 200,000 barrels, with several partners, including Petro-Canada, which holds a 20 per cent interest in Canada’s first offshore oilfield.

At the West Bonne Bay well, Husky operated the latest drilling program and holds a 27.78 per cent interest in the project, with Norsk Hydro holding a 72.22 working stake.

In trading on the TSX, Husky shares rose $1.18 to close at C$79.93, a gain of 1.5 per cent on a volume of 537,000 shares.

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