Muskrat Falls and decarbonizing offshore oil developments
The prospect of excess hydroelectric power from Muskrat Falls is fuelling hopes of making Newfoundland and Labrador’s offshore a more attractive and competitive destination for oil companies.
With oil companies dramatically scaling back exploration and existing fields in decline, experts are predicting a worldwide shortfall of up to 25 million barrels per day by 2030. But the province is hoping to fill some of that gap providing companies like BP Canada Energy Group can be encouraged to move ahead with exploration projects.
The prospect of green, hydroelectricity to power offshore developments is the kind of incentive companies are looking for as they rush to lower their carbon emissions in response to the changing climate.
At a recent conference hosted by the province's oil and gas industries association, known as NOIA, speakers focused on the challenges of remaining competitive in a sector that has slashed capital spending by an average of 30 per cent this year because of the COVID-19 pandemic and the ongoing challenges of climate change.
With a theme of "Evolving Our Offshore: Balancing the Energy Mix," one of the issues addressed was how a potentially supersized oil field – one with the potential for between four billion and five billion barrels of recoverable oil, based on geoscience findings – in Newfoundland's offshore might be developed.
The answer, still hypothetical, could be tapping into excess electricity from the Muskrat Falls hydroelectric project in Labrador to power as many as four floating, production, storage and offloading vessels, known as FPSOs.
The conference was told that power generation can account for up to 85 per cent of carbon dioxide emissions from oil installations, and electrification may be the best strategy for decarbonizing the offshore.
One prospect being eyed for this treatment is Cape Freels, located in a frontier area known as the West Orphan Basin, some 350 kilometres northeast of St. John's. It has the potential to dwarf existing fields like Hibernia and Hebron in the Jeanne d'Arc Basin, and is one of 16 prospects identified through 3D seismic surveys with "significant" potential for future development.
BP has acquired the rights to explore the prospect, and has been approved for an aggressive drilling campaign beginning as early as next year.