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NOIA Golf Tournament
Thursday, 16 Sep 2010
  
5th International Symposium on Oil and Gas Resources in Western Newfoundland
Wednesday, 22 Sep 2010
  
Maritime Human Resource Conference
Tuesday, 28 Sep 2010
  
Networking Social
Thursday, 28 Oct 2010
  
Member Christmas Reception
Thursday, 9 Dec 2010
  Lorneville Mechanical Contractors
  Martin Industrial Group
  Spatial Energistics Group Inc.
  Weatherford Laboratories
 
NOIA News
Cover: A Future Full of Potential
WHAT WILL BE THE NEXT BIG ANNOUNCEMENT?

With Deep Panuke and the White Rose Expansion underway, we now take a look forward to survey the opportunities on the horizon.  East Coast Canada’s supply and service sector is ready, willing and able to support a number of potential projects.  The question remains: What’s next?

Announcements are anticipated on the Federal Joint Support Ship Program and the potential LNG terminal, as well as the Hebron and Hibernia South developments offshore.  Any one of these projects will mean significant investment in the region, its people, its industry and its infrastructure.

Canadian Navy Joint Support Ship
The Joint Support Ship program (JSS, also referred to as Project M2673) is intended to deliver three multi-role ships to the Canadian Forces to satisfy a number of operational deficiencies and add strength and flexibility to the Canadian presence at sea.  The main tasks of these three vessels will be: task group support; helicopter operation support; transport of vehicles, ammunition, fuel, water and goods and parts; command and control support of a Joint Task Force; and medical support of a Task Group.  

The program is essentially divided into two separate contracts, both of which will be awarded to the same bidding group.  There will be a Design/Build contract valued at $1.51 billion and a 30-year In-Service Support contract, valued at $800 million.  Each of these contracts is two-phased: the project definition phase involves development of several designs to be evaluated and then narrowed to one that is selected for further detail design; the project implementation phase includes everything from detailed design to procurement, fabrication, assembly, outfitting, commissioning, trials and acceptance of the three ships.  Once the ships have been accepted the ISS support program begins.

Two contractors are currently competing to deliver proposals and offers of project implementation and support.  On one hand is a bidding group led by SNC-Lavalin ProFac Inc. out of Vancouver, BC, and on the other is a group led by ThyssenKrupp Marine Systems (TKMS) Canada Inc.  TKMS Canada is the prime contractor of the Canadian North Atlantic Marine Partnership (CANAMP) which also includes TKMS Germany, Maersk, Flensburger Schiffbau-Gesellschaft (FSG) and Peter Kiewit Sons Co (PKS), operators of the facilities at Cow Head and Marystown.  If TKMS is awarded this contract, the ships will be built in Newfoundland & Labrador.

In a presentation to NOIA members in May of 2007, Frank Smith of PKS explained that the company anticipates a requirement for $120 million upgrade to the Cow Head and Marystown facilities to enable Kiewit to undertake the shipbuilding portion of the contract.  The upgrade would include: a graving dock greater than 260 m long and 40 m wide; another assembly hall; a state-of-the-art cutting and panel line facility and a submersible barge lifting system for shipbuilding under 120 m.

Because JSS is a major project that must meet the requirements of the Federal Industrial Regional Benefits (IRB) regulations, the potential benefits to the region are many.  The bidding consortia are committed to meeting the requirement that the full contract price must be spent in Canada through Canadian based firms, either by way of Direct or Indirect Benefits.  This will mean that at least $1.5-2.0 billion will be spent across Canada in the Design/Build stage and about $800 million for the In-Service Support.

If CANAMP is awarded the contract, the multi-year impact on the Newfoundland & Labrador and Burin Peninsula economies is expected to equal or exceed White Rose and will also result in a significant upgrade to PKS’s Marystown and Cow Head facilities – further improving an already substantial regional fabrication asset.

The contract award announcement is expected this summer.

Hebron Development
Newfoundland & Labrador’s oil and gas industry has been in high anticipation through July, after Premier Danny Williams announced at the NOIA International Petroleum Conference in June that a deal was expected in the near term, potentially before summer’s end.  The supply and service sector has been doing lead work, to be ready to register as qualified bidders and respond to EOIs and RFPs when the project officially starts.  

Businesses have been scoping out suppliers and devising recruitment strategies for the required skillsets.  The St John’s Port Authority is planning for increased traffic and the pending announcement will undoubtedly serve as the tipping point for a cascade of activity that will continue apace for many months and years to come.

The Hebron oilfield, which consists of Hebron, Ben Nevis and West Ben Nevis, is estimated to rival Hibernia in size at approximately 700 million barrels of recoverable oil.  Discovered in 1981, before technology existed to economically extract its heavy oil from its highly fractured reservoir in a cold offshore environment, Hebron development has been something of a Holy Grail for Newfoundland & Labrador’s petroleum industry.  

The preferred mode of development is a Gravity Base Structure (GBS) about two thirds the size of Hibernia’s GBS.  The topsides will comprise a single drill rig, as well as the requisite accommodations, process and utilities facilities, together weighing in at between 20 and 28 thousand tonnes.  Construction and fabrication is expected to take some three years.  Oil will be drawn from 30-50 wells, some of which will be pre-drilled while construction is carried out.

The economic impact of Hebron development within the region can be likened to those of Hibernia (adjusted, of course, for scale) and White Rose combined, with GBS construction, topsides fabrication and drilling likely to occur concurrently over a period of 3 years:  there could be as many as 4000 people at work on the project in Bull Arm, Marystown and St John’s and on Grand Banks drilling operations.

The pre-production costs of the project will range between $4-6 billion, with total cost over the life of the field projected at $7-11 billion.

Upon reaching first oil, Hebron is expected to produce at a rate of 200,000 barrels a day for 25 years.

The field has been under serious consideration for development since 2000-2001 and much of the pre-development work, such as conceptual well and platform engineering, has already been completed.  While the project has been stalled at various times for various reasons, the announcement of a government – project partner MOU in August 2007 renewed hope and boosted business confidence.  When underway, Hebron will propel Newfoundland & Labrador’s petroleum industry into a new era.


Hibernia South development
The Hibernia oilfield achieved first oil in 1997 and after ten years of strong flow-rates has reached peak production.  Fortunately, the option exists to extend the high-yield life of the ground-breaking Hibernia facility by tapping into the nearby Hibernia South field.  This field is estimated to contain at least 223 million barrels of recoverable oil.  

In June 2008, again at the NOIA Conference, Premier Danny Williams announced that he fully expects a deal on Hibernia South by year’s end.  This is very positive news at a time when industry is looking for ways to prolong the life of the existing fields and explore for more ways to develop and expand our fledgling industry.

Drilling and development of Hibernia South will likely be tied into the existing structure, with additional subsea systems for further field development.  More information on this project is not yet available, as the Hibernia South Development Plan Application is still in the works.  


LNG Terminal at Grassy Point
Newfoundland LNG Ltd is proposing to build a liquefied natural gas transshipment and storage terminal at Grassy Point, Placentia Bay.  This terminal would provide transshipment and storage services for LNG importers and providers in both Canada and the northeastern United States.

This proposed project would be developed over three phases, requiring the construction and operation of three jetties with berthing capability for LNG tankers up to 265,000 m3, a tugboat basin and eight LNG storage tanks.  Over the three phases of construction, employment is expected to fluctuate between 300 and 400 persons and total potential employment in construction, trades and engineering is expected to be 2830 person-years.  There will be about 125 permanent jobs during the operations phase, and the terminal is expected to have a project life of 50 years.  Newfoundland LNG is committed to hiring Newfoundland & Labrador residents and contractors, providing the appropriate skill set and availability exist.

This project will be a great asset to the natural gas industry globally.  Grassy Point is located in close proximity to one of the largest LNG markets in the world, the Northeast United States, and as such will add value to the Atlantic basin LNG supply and delivery chain.  If one were to look at the current market dynamics and increasingly long shipping distances in the global LNG transport business, it is easy to see that there is a long term need for strategic transshipment and storage facilities to service key North American markets.  Newfoundland LNG wants their project to be a part of this strategy.  

The terminal will also add value to the province by adding infrastructure to support natural gas development.  Natural gas is a logical next step in Newfoundland & Labrador’s offshore development, and having a transshipment and storage facility onshore in the province would add value and further mature our industry.  The facility’s proposed location boasts several strategic advantages, including: it is just two days sail from the US Northeast; it is close to international shipping routes; the area is ice free under normal winter conditions; it can support safe transit of even the largest carriers and the area is accessible from the existing road system, without the requirement for additional major road construction.

A future full of promise
With so many potential capital projects on the horizon, our region’s opportunity landscape is richer and more populated than ever before.  The future is full of promise and our supply and service sector is eager to pursue it.

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