Partners prepare to start an onshore oil industry in western Newfoundland.

Canadian Imperial Venture Corp. intends to prove Newfoundland's oil industry isn't restricted to the huge offshore structures to the east. It has farmed in to a prospect that could prove up a western onshore play as well.
The basis for the play is the Port au Port 1 well drilled by Hunt Overseas Operating Co. in 1995, on land it owned on the Port au Port peninsula at the extreme western edge of Newfoundland with partner PanCanadian Petroleum Ltd.
The well flowed 3,270 bbl of oil, 4.9 MMcf of natural gas and 1,237 bbl of salt water in Hunt's production tests, and early tests showed potential production between 1,000 b/d and 3,000 b/d and potential reserves between 9 million bbl and 13 million bbl of oil under the 84,000-acre (34,000-hectare) license.
Those tests included 1,528 b/d of oil, 2.6 MMcf/d of gas and 985 b/d of water from the St. George/Table Head group from 11,390 ft to 11,405 ft (3,472 m to 3,476 m) through a 24/64-in. choke, and 1,742 b/d of oil, 2.3 MMcf/d of gas and 252 b/d of water from St. George between 11,350 ft and 11,359 ft (3,459 m and 3,462 m) through a 32/64-in. choke.
This is no offshore giant field like Hibernia with 600 million bbl of oil reserves, said Steve Millan, chairman, when he farmed into the prospect, but it could be a good field for a smaller company like Canadian Imperial.
In a later speech to a Newfoundland organization, he estimated reserves in the whole western Newfoundland basin at 8 Tcf of gas and 3 billion bbl of oil. But that's for the whole basin, not just the Canadian Imperial Garden Hill farm-in properties. The basin contains three major structures, he said, and the Garden Hill structure is not the big one.
By the end of May 2000, the company had conducted production tests of its own on the discovery well, and Millan announced he would contract 17 miles (27 km) of seismic to further define the field.
Western Geophysical conducted that 2-D seismic survey on the south Garden Hill structure.
At about the same time, the company determined the initial well had been drilled near the edge of the structure near a fault zone, and it was difficult to determine if it was communicating properly with the main reservoir, said Kirby Mercer, vice president. That well also was near the oil-water contact, which explained the high water production during initial testing.
The next step, assuming the seismic bore out suspicions, would be to contract with Baker Hughes to install a splitter in the surface casing and drill a new shaft horizontally from the original wellbore to a point 164 ft (50 m) higher on the structure to avoid the water contact.
When the company filed its development plan with the government, that plan included potential development of all three structures along the western edge of the Port au Port peninsula.
The company said at least one of these structures is larger than the one tapped by the Port au Port 1, and it potentially holds more oil.
"The full-cycle economics of exploring and developing any individual structure are marginal but are far more favorable if the three structures are developed as a single, integrated project with common infrastructure and ownership," Mercer said. "Therefore, we are proposing a step-by-step development with each successive step being dependent on earlier project experience and the existence of a viable business logic for further investment."
By early December, the company was preparing the site for drilling, and it had contracted with National Oilwell for production equipment, including separation and processing hardware.
The production tests showed the original well could produce at a rate of 2,500 b/d, but the high water cut made a lower production rate preferable. The company calculated the new leg of the well out of the way of the oil-water contact should produce between 2,000 b/d and 3,000 b/d.
Another change had taken place as well. The seismic survey and simulated 3-D processing forced the company to change its development plan.
The survey showed the field has the potential for discovery of recoverable reserves in the range of a most-likely 70 million bbl up to speculative upside of 127 million bbl of oil.
The new plan called for a 22-mile (36-km) seismic survey early this year over the northern part of Garden Hill field, an area two to two-and-a-half times as large as the southern portion.
Those are the reasons for the growing anticipation of recompletion of the Port au Port 1 well in this quarter.