New gas exploration likely off Labrador

Drilling for petroleum off Labrador's coast may not be far away, industry watchers and Inuit leaders say.

The Canada-Newfoundland and Labrador Offshore Petroleum Board started an environmental assessment of the Labrador Sea region in January and is accepting bids for exploration on the Labrador Shelf.

Four tracts of sea floor are open for the current bids, which close in August.

Michael Enachescu, an earth sciences professor at Memorial University in St. John's, said natural gas is the target for the current round of exploration, although oil reserves may also be located.

"[The] call for bids means that practically next year we'll have the return of oil and gas companies to Labrador for exploration, but drilling might not happen before the end of the decade," Enachescu said.

Natural gas has already been found and in substantial quantities off Labrador. Petro-Canada and Husky Oil drilled 26 test wells on the Labrador Shelf in the 1970s and 1980s.

Five holes containing natural gas were located off Hopedale, with four trillion cubic feet in proven reserves.

The finds were sizeable, but the gas is so far offshore, and in such a harsh environment, that companies have opted not to develop them.

However, natural gas prices are at an-all time high, and successful gas projects have been developed in other harsh climates, including off Norway.

Petro-Canada, the company that first found natural gas off Labrador, is not commentingwhile the CNLOPB tender process is ongoing.

Meanwhile, the new environmental assessment of the Labrador Shelf is being regarded as another positive sign. Emerging rules would help guide any future exploration.

The Nunatsiavut Inuit self-government, which controls a substantial part of northern Labrador, is co-chairing that process.

"The level of concern is really high," said Marina Biasutti, Nunatsiavut's environment director.

"We're talking about exploration much like we've been dealing with on land, but with much more risk. For this reason, it's being treated a lot differently."

The offshore oil industry has emerged as the key economic driver in Newfoundland and Labrador. Starting with Hibernia in 1997, three oil fields are now in production on the Grand Banks, southeast of St. John's.