Statoil 'disappointed' with reduced prospects for Bay du Nord discovery

The results from a 19-month offshore drilling program in Newfoundland and Labrador are being greeted with some cautious optimism.

Statoilannounced on Friday morning it has made two new discoveries in the Bay du Nord area, confirmingan earlier estimate of 300 to 600 million barrels of recoverable oil in the area.

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OrjanBirkeland, a vice-president at Statoil, said the recoverable amount isat the lower end of that original estimate, but the campaign was good news for his company.

"Of course we are disappointed that we are at the lower end of our prediction," he said Friday."We still think that the FlemishPass has a very interesting potential, so we will continue our activity in this area."

No firm timelines

Statoilwrapped up its drilling program last month, with the West Hercules semi-submersible returning to Bay Bulls on May 24.

Nine wells were drilled near the Bay duNorddiscoveryabout 500 kilometres off St. John's,and thecompany confirmed its two new oil discoveries are near that site.

Birkeland said there was still a lot of assessment to do on the project, and there were no firm schedules for commercial operations to begin if they start at all.

"So there's a lot of pieces in this puzzle that needto be in place," he noted.

Hope for FlemishPass

Both Statoil and NOIA the province's offshore oil industrial association are optimistic about the future of the Flemish Pass basin.

Statoilhasinvested heavily in the area, andBirkelandsaidit will keep going.

NOIApresident and CEOBob Cadigansaidwith a continuing 3D imaging program, and only a few potential sites drilled so far, there's reason to believe work will continue in the area.

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"Certainly, we like to see estimates come in higher than the original estimates. But if not Bay du Nord, we expect that certainly our next development will come from the Flemish Pass basin," he said.

The provincial government also heralded the results of the survey, adding in a news release that the Flemish Pass has seen an "impressive success ratio for a frontier basin."

The government said more than a dozen wellshave been drilled, and five oil discoveries were announced in the area.