Oil companies plan $186-million exploration program off Labrador

For the first time in 25 years, oil companies will be drilling off the northern Labrador coast to see if the area has commercially viable fields.

While oil production off southeastern Newfoundland has been booming, with three fields in full production and a fourth now being prepared for drilling, oil companies have been leery of tapping into remote, chilly Labrador waters which also happen to be in the midst of the so-called "iceberg alley" that poses an annual hazard for commercial shipping.

Five companies Husky Oil, Chevron Canada Ltd., Vulcan Minerals, Investcan Energy Corp. and Suncor Energy are involved in four separate parcels, which together cover more than 939,000 hectares of land.

The Canada-Newfoundland and Labrador Offshore Petroleum Board, which announced the sales Thursday, said the companies plan to spend $186.4 million exploringthe area, where more thanfour trillion cubic feet of gas have already been found.

CNLOPB chair Max Ruelokke said the companies will also be conducting new research on drilling in the remote area.

"A lot of it most of it, in fact will be the gathering of new data," Ruelokke told CBC News. "So there will be seismic vessels into the area for fairly significant surveys and certainly one bid is high enough that it includes a commitment big enough to allow them to drill a well."

Under the terms of the licences, the companies have nine years to conduct the exploration.

The CNLOPB said official estimates of reserves off the province, including the oil-rich Jeanne D'Arc Basin on the Grand Banks, involve 2.84 billion barrels of oil and 10.9 trillion cubic feet of natural gas.