Shell Finds No Oil at First Shelburne Well

Stena IceMax (file image)

By MarEx 2016-09-21 21:06:48

Royal Dutch Shell's $1 billion Shelburne Basin exploration project off Nova Scotia is off to an unfortunate start: a consortium led by Shell Canada did not find oil or gas at the first exploration well.

Shell holds exploration licenses on six blocks located about 160 nautical miles south of Halifax; the prospects are in up to 2,000 meters of water. The consortium plans for up to seven exploration wells in the area and Stena's high-spec Stena IceMAX drillship is contracted for the campaign. 

Shell began drilling the well, dubbed "Cheshire," in October of last year. The consortium encountered difficulty with weather in early March. On March 4, crews were preparing to disconnect from the well as a storm approach, and they isolated it at the blowout preventer and flushed the riser out with seawater. Shortly after, Shell said that heavy wave action caused the "riser tensioner system" to let go, dropping a 6,500 length of riser to the seabed. The well was undamaged, but drilling activity did not restart until June 24, pushing back well completion. 

Non-operating partner Suncor Energy of Alberta, Canada reported the news. It says that it will write off its portion of the cost of the well, which totals to about $100 million. Suncor is a 20 percent owner of the partnership; Shell Canada holds 50 percent and ConocoPhillips Canada East holds 30 percent. 

The next well in the campaign, "Monterey Jack," was scheduled to start September 7 and is expected to take up to 130 days. 

After the consortium completes each well and evaluates its commercial potential, Canadian regulations require the operators to plug and abandon the finds.

The plan has raised concerns among local residents and fishermen as the nearest capping stack - used to cover a well in the event of an uncontrollable blowout – is located in Norway, up to 13 days' sailing away from the drill site.