Additional hydrocarbon-bearing sediment has been found at the 13,500-foot level of Chevron Standard's Hibernia 0-15 well off the coast of Newfoundland, the company announced today.
Harold Haynes, chairman and chief executive officer of Standard Oil Co. of California, Chevron's American parent, said the company hasn't had time to evaluate the new hydrocarbon zone or zones, and is unable to assess the value of the find.
The well is about 192 miles northeast of St. John's, Newfoundland.
Speculation about the Hibernia well touched off heavy trading in oil stocks last week. However, the subsequent announcement that the well had flowed at a rate of only 800 barrels a day dampened the enthusiasm.
Haynes said the well has since been extended another 230 feet. Although hydrocarbons were confirmed in the sediment at the new level, the company hasn't determined whether oil or natural gas has been found, or how many hydrocarbon zones are involved.
A second well will be drilled adjacent to the Hibernia well, Haynes said. The operator of the new well probably will be Mobil Canada Ltd., which has extensive Atlantic drilling experience.
"The partnership of Chevron, Gulf, Petro-Canada and Columbia Gas will continue, and we have confidence and (hope) good results will come out of this exercise," Haynes said.
"However, there are a lot of factors to determine whether a well will have a commercial use," he added.
"This is a hostile frontier, and we want to find millions of barrels before we consider having a commercial venture off the coast of Newfoundland. We have to consider the initial rate of production, the size of reserves, cost of facilities and whether we can produce from the area before a final decision can be made," Haynes said.
He said commercial production would require a far greater oil flow than the 800 barrels per day confirmed so far.
"It's worth noting the well would not have been drilled without federal incentives," Haynes added, apparently to plug the federally owned oil company, Petro-Canada. "This isn't to say Chevron wouldn't have eventually drilled, but there would have been a delay."
The Hibernia well is to be drilled to a depth of 16,000 feet. Chevron expects to complete the project before the end of this year's drilling season.
Analysts have said that an offshore Newfoundland well with commercial potential could be producing oil within five years of exploratory tests.
Newfoundland is estimated to have offshore reserves of 2 billion to 10 billion barrels of oil, perhaps exceeding Canada's current proved oil reserves of 8.3 billion barrels. A barrel contains 42 gallons.
In toronto, meanwhile, Gulf Canada Ltd. said one of its five exploratory wells off the coast of Labrador has shown "indications of hydrocarbons" even though mechanical problems have slowed drilling.
Gulf said a second well has been abandoned, while drilling is continuing at two others.