Terra Nova Ready to Flow

Terra Nova is nearly complete, Petro-Canada's field asset manager Gordon Carrick said during a tour of the project's FPSO at Bull Arm construction site in Newfoundland.

The last tasks to be finished are drilling and reservoir, subsea and marine operations, hook-up and completion, and operations readiness. After concluding sea trials in nearby Trinity Bay, the ship will sail to the field for two to three months of offshore commissioning activities.

"The plan calls for introducing hydrocarbons in late September or early October and then starting deliveries in mid-October," says Hydro's vice president for offshore development and operations, Lars Andreas Sunde.

Five of six initial wells are already drilled and operations will "quickly ramp up" from about 80,000 barrels per day (bpd) by the end of this year to about 130,000 bpd in late 2002, Carrick reports, adding "so far, our wells have met expectations."

A total of 24 wells – 14 producers, seven water injection and three gas injection wells – will be drilled during the field's planned 15-year lifetime.

Terra Nova is estimated to hold more than 400 million barrels of recoverable oil and has potential for another 100 million barrels in an undrilled adjacent block.

Double-hulled and built with 3,000 tons of extra steel to protect it from renegade icebergs, the FPSO has five dynamic positioning units with 100 tons of thrust each. The dual satellite-guided DP system can actually ask the ship to move as little as 10 centimeters.. Together with heavy anchor chain secured to the seabed, the ship will only deflect 1.5 meters in a 100-year storm. The FPSO, which has the world's largest disconnectable turret, can produce up to 150,000 bpd and has a 960,000-barrel storage capacity.

Originally slated to start producing in late 2000, extra time was required to perform remedial work resulting from late and incomplete engineering and quality problems identified in vessel and topsides modules. An estimated 500,000 man-hours initially planned to complete the FPSO have subsequently soared to 2 million hours in the budget update in February 2001. The original budget of CAD 2.1 billion (EUR 1.6 billion) will likely end up at around CAD 2.7 billion (EUR 2.09 billion).

Hydro's part includes an alliance with operator Petro-Canada, lending technical assistance based on 25 years of developing and operating oil and gas projects in precarious Norwegian waters. The alliance's immediate task is finishing the Terra Nova field development project – the world's first to deploy an floating production storage and offloading (FPSO) vessel in harsh, iceberg-prone waters – set to start producing this fall. Faced with unfamiliar challenges, Petro-Canada sought even closer cooperation with its more experienced offshore partners. Hydro subsequently transferred its follow up of the Terra Nova asset from Calgary, Alberta, to St. John's, Newfoundland, in August 2000, to better assist the development's final phases. "We'd been ready to play a more visible role in the initial phases of the project, but weren't integrated to the extent we'd hoped for," says Sunde. "This has now changed and we have 30 people seconded to Petro-Canada on a full-time or part-time basis." "Norsk Hydro has brought a lot to the table," says Carrick, specifically pointing out Steinar Pollen, who served as the project's reservoir and drilling manager, and Odd Bye, who has been asked to stay on as operations manager through the entire start-up and into the production phase. "I don't think we'd have been as successful without them. They have enormous offshore process experience and the skills to do things we couldn't do ourselves."

Hydro owns 15 percent of the Terra Nova field, which is set to start producing this fall. Partners include operator Petro-Canada (34%), ExxonMobil (22%), Husky Energy (12.5%), Murphy (12%), Mosbacher (1.5%) and Chevron (1%).

Hydro also holds 5 percent of the ExxonMobil-operated Hibernia field, which began producing in 1998 and presently churns out 140,000 barrels of oil per day. The operation not only marked Hydro's first share of oil production outside the North Sea, but the first oil ever produced offshore Newfoundland.

Hydro also has 10 percent in the Chevron-operated Hebron and Ben Nevis area, recently upgraded to hold between 400-700 million barrels of recoverable, yet partly heavy oil. Chevron has indicated its intent to submit a development plan next year.

All of the above are located in the Grand Banks area, some 320 kilometers southeast of Newfoundland's capital city St. John's. The Grand Banks is estimated to contain more than 1 billion barrels of recoverable oil.

Hydro additionally possesses exploration rights in the promising Scotian Shelf and Fleming Pass areas. An exploration campaign is set to start on the Scotian Shelf this fall and drilling on Flemish Pass next year. The Hydro/Petro-Canada alliance was recently awarded rights to highly sought-after Block 7 in the Carson/Bonnition basin during Newfoundland's latest licensing round late last year.