A Review of Exploration, Development, and Production Cost Offshore Newfoundland

Natural Resources Research, Vol. 30, No.
2, April 2021 (Ó 2021)

https://doi.org/10.1007/s11053-020-09784-3
Review Paper
A Review of Exploration, Development, and Production

Cost Offshore Newfoundland
1,2
Mark J. Kaiser
Received 13 July 2020; accepted 13 November 2020

Published online: 3 January 2021
Operators have spent $84 billion Canadian dollars in exploration, development, and pro-
duction offshore Newfoundland, Canada, between 1966 and 2019, and have produced about
2 billion barrels of an estimated 3.3 billion barrels recoverable oil. Four major projects have
been developed—Hibernia, Terra Nova, White Rose/North Amethyst, and Hebron—using
two development concepts, gravity-base structures and floating production storage and
offloading vessels. The region is characterized by severe storm and sea conditions, including
the presence of icebergs, which challenge all aspects of exploration and development. From
1998 to 2019, exploration and delineation drilling cost averaged $90.9 million per well and
$26,494 per meter drilled. Development wells drilled from mobile offshore drilling units over
the same period averaged $91.1 million per producer well and $68.8 million per injector well.
Regional development cost was $32.5/bbl since the start of production and is expected to fall
to $22/bbl when recoverable volumes circa 2020 have been extracted. Average regional
production cost from 2006 to 2019 is estimated at $23.4/bbl and ranges from $16.8/bbl at
Hibernia to about $35/bbl at Terra Nova and White Rose. This is the first detailed evaluation
of exploration, development, and production cost offshore Newfoundland.
KEY WORDS: Development well, Exploration well, Labor requirements, Production cost.
INTRODUCTION unforgiving1 environment of the Northwest Atlantic

Ocean, project economics are challenging, and
Offshore oil and gas exploration began on the developments in the region have required extensive
Grand Banks off the eastern Canadian province of engineering and long periods to sanction. Hibernia
Newfoundland in 1966, with the first major discov- and Terra Nova came on-stream 18 years after dis-
ery, Hibernia, occurring in 1979. Other major discovery; White Rose took 21 years; Hebron took
coveries followed with Hebron in 1981 and the Terra 37 years.
Nova and White Rose fields in 1984. Remote with The areas where commercial oil deposits have
limited infrastructure and exposed to the harsh and been discovered are located on the continental shelf
about 300–350 km southeast of St. Johns, New-
1
foundland, in water depths between 80 and 125 m
Center for Energy Studies, Louisiana State University, Baton
(Fig. 1). The Grand Banks contains several Meso-
Rouge, LA, USA.
2
To whom correspondence should be addressed; e-mail: mkai- zoic basins that were formed by rifting and seafloor
[email protected] spreading associated with the fragmentation of
1
In February 1982, the Ocean Ranger semisubmersible capsized
Pangea in the Late Triassic that lead to the forma-
when it was hit by a strong wave during drilling operations at tion of the Atlantic Ocean (Fig. 2). Rocks of the
Hibernia, killing all 84 crew members. About 300 km south of Upper Jurassic sediment are the principle source for
Hibernia, the Titanic was sunk in 1912 by an iceberg.
1253
1520-7439/21/0400-1253/0 Ó 2021 International Association for Mathematical Geosciences
1254 Kaiser
much of the hydrocarbons in the North Atlantic

areas, including the Jeanne dArc sedimentary basin,
the only currently producing region on the Grand
Banks.2 The meta-ocean conditions in the region are
like the North Sea with large waves3 and severe
storm conditions (Carrick et al. 2005), but sea ice
and icebergs represent a severe hazard not present
in the North Sea. Without active management
(Fig. 3), about one iceberg impact per structure is
expected to occur every 10 years! Pack ice,4 ice-
bergs, and bergy bits are prevalent in the late winter/ Figure 1. Continental shelf of Newfoundland and Nova
spring, and fog is a frequent phenomenon in the Scotia, east coast of Canada. Source: GoogleEarth.
summer months.
From 1966 to 2019, operators have spent a total
of $84 billion Canadian dollars in exploration, devel-
opment, and production activities offshore New-
foundland and Labrador, approximately $15 billion in
exploration, $36 billion in development, and $33 bil-
lion in production (Fig. 4). Throughout this paper, all
expenditure data are inflation-adjusted and reported
in 2019 Canadian dollars using inflation rates pre-
pared by the Bank of Canada, unless otherwise noted.
Spending adjustments for offshore exploration,
development, and production activities may vary
significantly from a consumer goods perspective, but
for comparative purposes and consistent interpreta-
tion, inflation adjustment is necessary.
To date, two development concepts have been
employed in the region, concrete gravity-base
structures (GBS) and floating production storage
Figure 2. Distribution of Mesozoic basins offshore
and offloading (FPSO) vessels. Both strategies are
Newfoundland. Source: White Rose DA volume 2
designed to receive oil and gas from platform wells (development plan).
and/or subsea systems, process well fluids using
equipment on the structure, storing oil until trans- with the gas stored for possible production in the
ferred by shuttle tankers to shore. There are no future. GBSs are installed to drill wells from the
export pipelines in the region for either oil or gas, platform but can also employ subsea wells out of
and all surplus gas is compressed and reinjected reach5 of the platform rig, while FPSO develop-
back into reservoirs. Gas reinjection helps maintain ments require a mobile offshore drilling unit
reservoir pressure and facilitates crude recovery, (MODU) in well construction and service (i.e., all
FPSO wells are subsea wells).
2
Upper Jurassic sediments are also the principle source for the Concrete platforms for oil and gas development
previously producing Scotian Shelf fields offshore Nova Scotia, were built in the Gulf of Mexico in the 1950s for
Canada.
shallow water fields and reached their maximum
3
The 100-year significant wave height is 16 meters, and 1-h mean depth at the Troll A structure in 303 m in the North
wind speed is 40 m/s. Significant wave height is a statistical
Sea in 1996 (Mikkelsen et al. 2005). Only 30 GBSs
average of the 1/3 highest waves over a 20-min interval and may
not impress the reader unless they know the relationship between have been installed worldwide, most in the North
significant wave height and individual maximum wave height. Sea, two offshore Newfoundland, and one in south-
Individual waves are typically 1.5–2.2 times the significant wave east Asia. The inherent strength and stability of
height.
4 5
Sheet ice (also called pack or pancake ice) is the horizontal Roughly speaking, offshore wells drilled from a platform rig can
layers of sea ice that forms in calm sea water, freezing from achieve a horizontal offset of about 5–8 km from the spud
exposure to cold air from the top down. location.
A Review of Exploration, Development, and Production Cost Offshore 1255
Figure 3. Conventional single-line method for iceberg towing. Source: C-NLOPB, C-CORE.
8000 90000 GBSs can support large topsides weight with drilling
Cumulave Spending ($ million)
80000
7000 and production and can be designed to withstand the
70000
impact6 of a large iceberg. Platform rigs drill dry
Spending ($ million)
6000
60000
5000
50000 wells, also called dry tree wells since the tree is
4000
40000 above the waterline, which reduce drilling cost and
3000
30000 improve well maintenance, lower operating costs,
2000 20000
and have a greater resource recovery compared to
1000 10000
0 0
subsea wells. GBSs have several advantages for
iceberg-affected regions not subject to significant
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
sheet ice, but they require a large reserves base to

Exploraon Development Producon Cumulave
Figure 4. Exploration, development, and production 6

Hibernia and Hebron are built to withstand the impact of large
expenditures offshore Newfoundland adjusted to 2019
icebergs, in the case of Hibernia up to 6 million tonnes; the Terra
Canadian dollars, 1966-2019. Source: Data from C-NLOPB.
Nova and White Rose FPSOs are not designed to impact with
large icebergs but can withstand the impact of bergy bits up to
100,000 t.
1256 Kaiser
support the large capital expenditures and require gions, especially regarding spending levels and well
extensive project management and a long construc- reports, and in this paper we review the cost com-
tion cycle. ponents leading to production. For development
FPSOs also have many advantages in offshore drilling and production, data provides useful results;
oil and gas development. Like GBSs, they arrive at for exploration drilling and production cost, more
site with topsides already in place, and much of the inferences are needed, and results are less robust.
installation can be completed onshore/inshore. They This is the first detailed analysis of exploration,
are built based on conventional shipbuilding tech- development, and production cost offshore New-
nology and have a large workspace with heavy foundland.
payload capacity, and they offer easy installation The outline of the rest of this paper is as fol-
and decommissioning. About 200 FPSOs are de- lows. The license areas offshore Newfoundland and
ployed worldwide and under construction circa 2020 Labrador introduce the setting and are followed by a
ranging from the Barents Sea offshore Norway to summary of exploration activity, producing fields,
Australia (Offshore Magazine 2019). FPSOs provide development activity, production, and reserves.
a flexible development strategy with advantages in Exploration cost per well and depth drilled is esti-
reduced capital investment, varied ownership and mated, along with related summary statistics, and
operatorship options, and accelerated schedule. development drilling trends and average cost for
FPSOs are not designed for iceberg impacts, how- MODU wells are examined. The strategies and
ever, except small bergy bits, and pack ice conditions trade-offs for iceberg-prone developments are
must be minor. Drilling operations cannot be per- highlighted, as well as employment data associated
formed on deck due to the motion characteristics of with each project. With only four projects in the
the vessel, so all FPSO wells are subsea. If an iceberg region, each is examined individually. The paper
presents a risk of collision, the FPSO must discon- concludes with an evaluation of unit development
nect from its turret and risers and exit the area to and production costs. In three appendices, infor-
avoid contact. mation on iceberg management, drilling time and
In the early days of Grand Banks exploration, cost curves, and reservoir management requirements
ice avoidance was the prevailing philosophy during are described. A primer on icebergs and the ice
drilling. Close encounters with icebergs could force a management plans employed by operators is sum-
MODU to stop drilling and evacuate or prepare for marized since it is a unique and interesting feature of
impact, which can significantly increase the cost and development in the region. Time vs. depth and time
risk of operations, and in the case of FPSOs, to vs. cost curves are used in development well cost
disconnect and leave the area in the event of analysis and are briefly reviewed for readers
unmanageable ice. Today, there is a joint regional encountering them for the first time.
ice management plan that enables coordinated re-
sponses for all the operators on the Grand Banks.
The plan provides for coordination of ice and ice- LICENSE TERMS
berg detection, monitoring and trajectory projection,
and coordinated management of response actions to The Canada–Newfoundland and Labrador
icebergs transiting the areas that present risk to Offshore Petroleum Board (C-NLOPB) is the reg-
drilling and production. The iceberg management ulatory agency overseeing oil and gas activities off-
system includes definition of alert and exclusion shore Newfoundland and Labrador within Canadas
zones, and coverage surveillance using satellite exclusive economic zone (EEZ) and issues land
imagery and aerial flights. rights in the form of Exploration Licenses (ELs),
The purpose of this review is to evaluate the Significant Discovery Licenses (SDLs), and Pro-
exploration, development, and production cost off- duction Licenses (PLs) (Fig. 5).
shore Newfoundland using publicly available data. Under international law, coastal states have
In most producing areas of the world, detailed field sovereignty and jurisdiction over their territorial sea,
data are unavailable and require expensive com- defined from the coastline to a 12 nautical mile
mercial subscription services to access, but in a few (nm)7 limit, and these rights cover the resources of
countries (e.g., Canada, Norway, UK, USA), reli-
able data are available from government agencies. 7
A nautical (or geographical) mile is 1852 m or about 6076 ft
Newfoundland is one of the most transparent re- (1.15 statute miles). A statute mile is equal to 5280 ft.
Figure 5. Newfoundland and Labrador offshore license information, January 2020. Source: C-NLOPB.
the surface, water column, seabed, and subsoil, and in 1982 and provides a coastal state a maritime
extend vertically to the airspace. In other words, the boundary extending 200 nm (370 km, 230 mi) from
12-nm coastal zone is considered, for all practical their coastline where they are granted exclusive
purposes, identical to a nations land. Unlike the economic rights to regulate fisheries, mineral
territorial sea, which derived from conventions development, and environmental protection. The
going back hundreds of years, the exclusive eco- EEZ is not sovereign water, but exclusive economic
nomic zone (EEZ) was a relatively recent creation rights can be quite valuable.
of the UN Law of the Sea Convention (UNCLOS)
1258 Kaiser
Canadas EEZ covers the majority of the con- EXPLORATION DRILLING

tinental shelf8 offshore Newfoundland and Labra-
dor, except for the ‘‘nose’’ on the eastern extremity, Well Type
near the Flemish Cap, which is beyond the EEZ
limit, and the ‘‘tadpole’’ surrounding the French Exploration and development wells are used to
territories of St. Pierre and Miquelon that juts south find commercial accumulations of hydrocarbons and
of the island. develop them. Exploration wells are drilled outside
According to UNCLOS, a country may also known reservoirs, and therefore, exploratory drilling
claim an extended continental shelf beyond the almost always10 takes place from a MODU such as a
200 nm (370 km, 230 mi) granted to all coastal na- jack-up, semisubmersible or drillship. Development
tions by their EEZ. States present geological evi- drilling is different from exploration drilling, since
dence to a UN commission, which judges the the objective is to produce, while in exploration the
scientific validity of assertions. Countries with objective is to find hydrocarbons, and in appraisal, to
rightful but overlapping claims are expected to come delineate the reservoir and gather the necessary data
to a settlement. Article 76 of UNCLOS outlines for planning the development. Delineation wells are
limits of the continental shelf that a country can used to determine the areal and vertical extent of
claim, either 350 nm (648 km) from the baseline, or reservoirs and have many similarities to exploration
100 nm (185 km) from the 2500-m isobath. For wells.
submarine ridges, only the 350 nm (675 km) limit is In exploration drilling, pressure regions are
applicable. Coastal states seek to claim the largest unknown which result in conservative mud weight
continental shelf that is (legal) within the rules practices and casing design and slower rate of pen-
established by UNCLOS. Canada has submitted its etrations. This typically results in slow, expensive
application to the UN for an extended continental wells. Exploration wells are also almost always
shelf claim9 offshore Newfoundland and Labrador. drilled vertically straight down to target unless by-
ELs may extend to a maximum nine-year term pass and sidetracks are required. If exploration is
if a well is spudded within the first period (either 5 or not successful, sidetracks may be drilled prior to
6 years) from the date of issuance. SDLs acknowl- abandonment to better understand the formation
edge an owners right to hold interests indefinitely geology, which adds to the cost of the well. Onshore,
where the area has potential for sustained produc- most successful exploration wells transform into
tion of petroleum. PLs permit an owner to produce producer (development) wells since land and
petroleum from an interest, consistent with ap- infrastructure requirements are not constraining,
provals and authorization from the C-NLOPB. while offshore, this is much less common. Delin-
eation drilling typically includes coring, fluid sam-
pling, drill stem tests, etc., which also contributes to
high drilling cost.
8
Continental shelves are simply the submerged parts of conti- Exploration Expenditures
nents. In areas without subduction zones, such as the land masses
bordering the Atlantic and Arctic Oceans, continental shelves are From 1966 to 2018, 173 exploration wells and 59
wide. In active subduction zones where oceanic plates are delineation wells were drilled offshore Newfound-
subducted under continental plates, such as around the Pacific
land and Labrador, and operators spent $14.6 billion
Ocean, continental shelves are narrower (Truillo and Thurman
2014). The average width of the continental shelf worldwide is on exploration activities during the period (Fig. 6).
about 60 km, varying from less than 10 km along active plate Most drilling occurred east of Newfoundland in the
tectonic margins adjacent to subduction zones, to shelves up to Jeanne dArc sedimentary basin and surrounding
1000 km along passive margins such as in the Arctic region. area (168 exploration wells, 55 delineation wells),
9
A common point of confusion regards the relation between with the remaining wells drilled west and south of
extended continental shelf claims and a states EEZ. Valid- Newfoundland and offshore Labrador. Exploration
extended continental shelf claims do not extend a states EEZ,
since the EEZ is determined from a 200 nm (370 km) distance
10
from a territorial baseline. The extended continental shelf claim Occasionally, exploration wells may be drilled from a platform
also pertains exclusively to the seabed and minerals contained rig if targeting an unproved formation, either deeper or signifi-
within, not to the water column (i.e., fishing rights) above. cantly offset from producing reservoirs.
1600 18 borehole determines the volume of rock that must

16
1400 be broken up and removed. The market rates of
Expenditures ($million)
14
1200 MODUs and unplanned events (e.g., weather) are
12
Wells Drilled
1000
10
also significant factors in well construction cost.
800
8
From 1966 to 2018, total aggregate cost per
600
6 meter drilled is estimated to be $14,235/m and
400 4 average aggregate well cost was $67.7 million/well.
200 2 The average annual well cost and average meter
0 0 drilled were $90.9 million/well and $26,494/m
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
(Fig. 8). Aggregate (composite) annual cost is the
Exploraon and Delineaon Wells Spending sum of all well cost divided by the number of wells
Figure 6. Exploration expenditures and number of and total meters drilled. Average annual statistics
exploration and delineation wells drilled offshore Grand are computed over the period year-by-year. Com-
Banks, Newfoundland. Source: Data from C-NLOPB. posite averages are always smaller than average cost
due to the manner of computation.
expenditures include seismic surveys, well site sur- From 1998 to 2018, 42 exploration wells and 31
veys, well testing, and drilling operations. Well cost delineation wells were drilled at a total cost of $5993
includes new wells spudded and drilled, wells reen- million, or $82 million per well. The average mea-
tered and drilled, and well abandonment. Explo- sured depth drilled during this period was 7253 m
ration and delineation wells are grouped together in per well. Reentered wells are not counted as new
evaluation since both are drilled using MODUs with wells, but new borehole is allocated in the year in-
relatively simple trajectories and similar cost char- curred. Some wells are reentered in later years one
acteristics.11 or more times, but for exploration and delineation
From 1966 to 1988, about $8.2 billion was spent drilling, relatively few wells are later reentered
in exploration on the Grand Banks and all the major (28,241 m total, or about 4% borehole drilled).
discoveries were made during this time. Over the Composite cost per meter drilled during this period
next decade, many fewer exploratory wells were was $22,690/m.
drilled as operators focused on developing their Individual well cost is not reported, only total
discoveries. Only about $500 million was spent from exploration spending per year, which covers all wells
1989 to 1998 on exploration, and for several years spud and the cost of reentries performed during the
during this period, no exploratory drilling occurred. year along with ancillary activities, and so the
Beginning in 1999, operators began to explore fur- statistics computed are an approximation to actual
ther afield, and another wave of exploratory activity well cost. Exploration/delineation well campaigns
occurred in the most recent decade. From 1999 to may overlap consecutive years, and companies may
2008, about $1.6 billion was spent on exploration, allocate costs between years, which will further dis-
and from 2009 to 2018, $4.3 billion was spent. tort the statistics.
Operators occasionally report exploration well
expenditures in their development applications, and
Exploration Well Cost this is useful information for comparison. For
example, in the Hebron project, ExxonMobil re-
From 1966 to 2018, 555,084 m of borehole was ported exploration cost for seven wells drilled from
drilled in exploration wells, 193,161 m in delineation 1980 to 1999. The average cost reported was $53.3
drilling, and 28,241 m in reentered exploration/de- million/well and $13,278 per meter drilled and ran-
lineation wells (Fig. 7). Measured depth is a primary ged between $24 and $111 million, with median cost
cost factor which along with the diameter of the $41.3 million (all unadjusted). At White Rose,
exploration well cost averaged $30 and $57 million
11
The same cannot be said for exploration/delineation and per well over two delineation campaigns in 1984–
development wells, however, where well objectives, configura- 1986 and 1989–1992, respectively (all unadjusted).
tions, and cost characteristics are quite different. Development In terms of wells drilled, exploration and
wells are typically drilled directional in two or three dimensions
and need to be completed; subclasses of development wells delineation activity has been low over the past two
include producers, injectors, and disposal wells which each have decades, typically less than three wells per year, al-
different completion requirements. though activity levels are occasionally higher. The
1260 Kaiser
70000 Suncor Energy Inc. is used in development (Fig. 9).

60000 Terra Nova oil is a light (34°API), sweet (0.52 wt%
sulfur), low-acid (0.03 mg/g) crude. Recoverable re-
Measured Depth (m)
50000
40000
serves are estimated at 506 MMbbl (80 million m3).
The White Rose field was discovered in 1984 in
30000
120 m water depth about 30 nm (56 km) northeast
20000
of Hibernia. White Rose has one principal reservoir,
10000 the Ben Nevis–Avalon, which began producing in
0 2005 from a FPSO operated by Husky Oil (Fig. 9).
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
Recoverable reserves are estimated at 404 MMbbl
Exploraon Delineaon Re-entry (80 million m3). In 2010, the 75 MMbbl (12 million
Figure 7. Borehole drilled in exploration, delineation, and m3) North Amethyst subsea tieback began produc-
reentry exploration and delineation wells offshore Grand tion through the White Rose facilities, and the West
Banks, Newfoundland. Source: Data from C-NLOPB. White Rose extension planned to use a gravity-base
wellhead platform for drilling but was suspended
250 90000
c.2020 due to the Covid-19 pandemic, Chinas gift to
80000
the world, and future operation is under review.
Well Cost ($million/well)
200 70000
Cost per Meter ($/m)
60000
The Hebron field was discovered in 1980 about
150
50000 5 nm (9 km) north of Terra Nova and 17 nm
40000 (31 km) southeast of Hibernia. First production was
100
30000 in 2017 from a GBS in 92 m water depth operated by
50 20000 ExxonMobil Canada Properties (Fig. 9). The field
10000
produces a heavy sour acidic crude (20°API,
0 0
0.92 wt% sulfur, 1.2 mg/g). Recoverable reserves
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
are estimated at 707 MMbbl (112 million m3).

Wells Drilled Meters Drilled
Figure 8. Average inflation-adjusted exploration and

delineation well cost and cost per meter drilled offshore DEVELOPMENT DRILLING
Grand Banks, Newfoundland. Source: Data from C-NLOPB.
Drilling and Completion

maximum average well cost reached $220 million
and $80,000 per meter.
Development well construction includes two dis-
tinct operations—drilling the well to total depth and
completing the well through installation of the tree.
FIELDS
Development wells include producer and injection
(gas, water) wells and disposal wells, and all successful
The Hibernia field was discovered in 1979 and
development wells require completion. Well comple-
began producing in 1997 from a GBS in 80 m water
tion represents the installation of packers, screens, and
depth operated by Hibernia Management and Devel-
other hardware coupled with perforations and stimu-
opment Company Ltd. (Fig. 9). Hibernia oil is a light
lation. The goal of drilling is to drill the well to target
sweet low-acid crude with a density of 32–34°API, a
depth at minimum cost in a safe and environmentally
sulfur content of 0.4–0.6 wt%, and a total acid number
sound manner in accord with all applicable laws and
of 0.09 mg/g. Recoverable reserves at Hibernia are
regulations. The goal of completion is to achieve high-
estimated at 1644 MMbbl (260 million m3).12
rate long-life completions to maximize production
Discovered in 1984 about 23 nm (43 km) south-
rates and resource recovery.
east of Hibernia, the Terra Nova field consists of one
Drilling cost depends on location (onshore, off-
reservoir, the Jeanne dArc, which began producing in
shore), purpose of the well (exploration, delineation,
2002. A double-hull ice-strengthened discon-
development), trajectory (vertical, directional, hori-
nectable FPSO in 100 m water depth operated by
zontal), borehole size and complexity (two-dimen-
sional, three-dimensional, extended reach), type
12
One barrel = 6.33 m3. For definitions of API, sulfur content, (original, sidetrack), measured depth, drilling plan
and acid number, see (Kaiser et al. 2020). (number of casings, mud weight, maximum angle, etc.),
Figure 9. Clockwise from top left: Hibernia gravity-base structure, Terra Nova FPSO, Sea Rose FPSO, Hebron gravity-base
structure. Source: Hibernia Management and Development Company, Suncor Energy, Husky Oil, ExxonMobil Canada.
drilling program (sequence, batch, number of wells nia, 56 at Terra Nova, 52 at White Rose/North
drilled), formations encountered, rig type (MODU, Amethyst, and 22 at Hebron (Fig. 10). The first
platform), market conditions, problems, weather, crew development well was drilled at Hibernia in 1997
experience, planning, and various other factors. after the GBS was installed—indeed, the main rea-
Completions are the interface between the well son for the selection of the GBS was the advantages
and the reservoir, and completion cost is impacted by of dry tree wells in development—whereas at Terra
type (single, multiple), complexity (gravel pack, frac Nova and White Rose/North Amethyst, all devel-
pack, smart), stimulation requirements, reservoir opment wells are drilled from MODUs13 with
management and downhole equipment (pressure and
temperature gauges, chemical injection, gas lift), time 13
MODUs that have operated in the region are high-spec harsh
of development, and other factors. Smart completions environment rigs such as West Aquarius, Transocean Barents,
refer to downhole equipment and sliding sleeves that Henry Goodrich, West Hercules, GSF Grand Banks, Eiric Raude,
Rowan Gorilla. Harsh environment rigs have several design
allow controlling production from multiple zones.
modifications to decrease weather-related downtime, including
increased variable load, increased air gap, greater levels of
automation, and changes in the geometry of the legs or columns.
Development Activity Harsh environments rigs cost more to construct than moderate
environment units and charge a premium to recover their higher
investment cost (Kaiser and Snyder 2013). The two drilling rigs on
Through mid-2020, 261 development wells have
Hibernia are called M-71 and M-72, and the Hebron rig is referred
been drilled offshore Newfoundland: 133 at Hiber- to simply as the Hebron GBS.
1262 Kaiser
development drilling occurring before and after Development Well Cost

facility installation. More than half of development
drilling at Terra Nova and White Rose/North End of Well reports14 are required by the
Amethyst circa 2020 has occurred after first pro- Newfoundland Offshore Petroleum Drilling and
duction (Table 1). Production Regulations and is a regulatory submis-
The total borehole drilled in development wells sion to C-NLOPB. End of Well reports serve as a
is about twice the total measured depth of explo- record of operations performed during the drilling
ration wells, 1.32 million meters vs. 777,000 m circa and completion of wells.
2020. Measured depth is measured along the path of Two of Newfoundlands offshore projects
the wellbore. At Hibernia, 772,648 m development (Terra Nova and White Rose/North Amethyst)
wellbore has been drilled through 2019, 226,644 m at provide cost data in End of Well reports. Hibernia
Terra Nova, 172,141 m at White Rose, 68,957 m at and Hebron do not report cost data, except in spe-
North Amethyst, and 76,253 m at Hebron (Fig. 11). cial cases, and so no comparisons can be made be-
Hebron is still early in its development campaign. A tween MODU wells and platform wells. Also, not
strong correlation arises between development well surprisingly, data from recent wells are somewhat
counts and total measured depth drilled because of more comprehensive and complete than early End
similar regional geology of producing formations. In of Well reports, which may not include cost vs. depth
Fig. 12, the regression yields a robust model fit (R2 = curves or completion cost.
0.97): Well type and well status are primary categories
in the cost evaluation. Producers and injectors have
Measured depth ðmÞ ¼ 4849 Well count:
been drilled and completed while suspended wells
Since operators are producing from the same trend are in an indeterminate (suspended) state, on their
and relatively narrow intervals within those trends, way to completion, or on their way to abandonment,
and because development well profiles are broadly if unsuccessful. Suspended wells15 are not consid-
similar across the four projects, the strong fit of the ered in evaluation unless their status is clearly de-
regression is not surprising. fined (e.g., suspended for completion). During
It normally takes 2–3 months on average to drill drilling, wells may be abandoned if problems arise or
and complete one well from a platform rig, and so at a productive zone cannot be found. Abandoned
Hibernia, the number of development wells drilled producer and abandoned injector wells were previ-
during its early years was limited to about 12 wells ously completed and are included in evaluation
per year from its two active drill rigs. Hebron has without abandonment cost.
one rig, and well counts are limited to about 6 wells Of the 105 wells reported, about two-thirds are
per year. For wells drilled from a MODU, drilling producer and injector wells, and the remaining wells
and completion time is a bit longer, but wells are are in various indeterminate states which were not
also usually simpler so annual well counts per rig are evaluated. Not all producer and injector wells pro-
about the same. vide both drilling and completion cost data, so sep-
14
The document compiles the data and learnings collected during
25 140 drilling and completion operations and includes operational
summaries and relevant reports generated by the operator and
Cumulave Development Wells
120
20 third-party contractors. Drilling reports normally range from 500
Development Wells
100
to 800 pages in length, and completion reports are often shorter,
15 80 200–500 pages. Drilling and completion reports are organized
60 according to a standard format, but there are differences in how
10
data are presented depending on the contractor.
40
5 15
20 Wells may be held in suspension for later completion, which is
the expectation in development drilling, but not all development
0 0
wells are successful. A well held in suspension may not be
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
completed or may be sidetracked later, or abandoned, depending

Hibernia Terra Nova White Rose/North Amethyst Hebron on conditions. For example, a producer or injector may not be
completed because the reservoir is cemented. After drilling, wells
Figure 10. Development wells drilled offshore Grand Banks,
are handed over to completions, which may commence immedi-
Newfoundland, 1997–2019. Source: Data from C-NLOPB.
ately, or the well may be suspended and completion operations
performed later.
Table 1. Development wells drilled offshore Newfoundland through 2019. Source: Data from C-NLOPB
Hibernia Terra Nova White Rose/North Amethyst Hebron
First production 1997 2002 2005/2010/2022b 2017

Before first production (#) 0 24 14/5 0
After first production (#) 132 32 22/10 22
Total wells (#) 132 56 36/15 22
Well type Dry/Weta Wet Wet/Wet/Dryb Dry
a
Hibernias wet wells are water injectors. All producer wells are drilled from the GBS
b
First oil from the West White Rose extension planned to use a gravity-base wellhead platform for drilling, but in 2020 in the aftermath of
the Covid-19 pandemic, Chinas gift to the world, future operations are under review and construction is suspended
and $15,923/m; White Rose wells cost $79.4 million

120000 per well and $16,349/m; and North Amethyst wells
100000 cost $107.7 million per well and $23,990/m (Table 2).
Borehole Drilled (m)
80000
Cost distributions for each well class are depicted in
Figure 14.
60000
40000 For Terra Nova production wells, the average

20000 D&C cost was $80.8 million per well and
$18,945/m. On average, for the five wells
0
reporting completion cost, completions rep-
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
resented 25% total well cost. The most

Hibernia Terra Nova White Rose North Amethyst Hebron
expensive producer well was drilled in 2019
Figure 11. Borehole drilled in development and reentry and cost $136 million, and the three most
development wells offshore Grand Banks, Newfoundland, expensive producer wells were drilled from
1997–2019. Source: Data from C-NLOPB.
2013 to 2019. For the 10 injection wells,
average D&C cost was $52 million per well
arate categories are provided for drilling, comple-
and $11,093/m, and the most expensive well
tion, and drilling and completion (D&C) well cost.
was $153 million.
Drilling cost and D&C cost are normalized in terms
For White Rose production wells, the aver-
of measured depth. For a brief review on time–depth
age D&C cost was $95.8 million per well and
and cost–depth plots, see Appendix B.
$17,623/m. For injection wells, the average
A total of 35 producers and 26 injector wells
D&C cost was $84.3 million per well and
from 1999 to 2019 provide drilling and completion
$15,117/m. Drilling and completion cost for
cost data. At Terra Nova, $2.2 billion was spent from
White Rose producer wells was about $10
1999; at White Rose, $2.5 billion was spent from
million more than injector wells, and about
2003; and at North Amethyst, $1.3 billion was spent
$2500 more per meter. Completion cost for
from 2009. The average D&C producer well cost was
producer and injector wells represented
$91.1 million, and the average injector D&C cost
about 30% of the total well cost.
was $68.8 million. The standard deviation of the
For North Amethyst production wells, the
sample data for producer wells was $42 million and
average D&C cost was $103.7 million per well
$45 million for injector wells. D&C cost distribution
and $20,533/m. For injection wells, the aver-
for all producer and injector wells in the sample is
age D&C cost was $116.1 million per well and
shown in Fig. 13.
$31,148/m. Drilling and completion cost for
At Terra Nova and White Rose, producer wells
North Amethyst injector wells was about $13
cost more to construct than injector wells, while at
million more than injector wells, and about
North Amethyst injector wells cost more than pro-
$10,600 more per meter, but small samples
ducer wells, due either to small sample bias and/or
and/or the complexity of the wells may be
more complex/problematic injector wellbores. In
partially responsible for the high cost.
total, Terra Nova wells cost $69.3 million per well
1264 Kaiser
120000 25
100000
20
Measured Depth (m)

80000
Wells Drilled
15
60000
10
40000
5
20000
0 0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Development Wells Measured Depth
120000
100000
Measured Depth (m)
80000
60000
40000
20000
0
0 5 10 15 20 25
Development Wells Drilled
Figure 12. Relationship between amount of borehole drilled and

number of development wells (top) and correlation (bottom)
offshore Newfoundland, 1997–2019. Source: Data from C-NLOPB.
Production peaked in 2007 at 134 million barrels

12
(MMbbl) or 368,000 barrels of oil per day (bopd) [21
10
million m3 or 58,400 m3/d].
Number of Wells
8
Natural gas associated with oil production is not
6 a sales product and, after fuel use and gas lift, is
4 compressed and reinjected for pressure maintenance
2
and potential later extraction. Some gas is flared for
0
safety purposes. A significant amount of water is
<30 30-60 60-90 90-120 120-150 >150 also produced with black oil reservoirs, and 1.25
Drilling and Compleon Cost ($million) billion barrels (198 million m3) was separated and
Producers Injectors
treated through February 2020 (Table 3). Oil and
water production tends to correlate with one an-
Figure 13. Development cost distribution for production and
injection wells from FPSO developments offshore
other in aquifer drive16 reservoirs after a period
Newfoundland, 1999–2019. Source: Data from C-NLOPB. (Fig. 16) and is readily observed at individual fields
(Fig. 17).
PRODUCTION AND RESERVES
16
In water drive reservoirs, the oil and gas reservoirs reside on
Through February 2020, 1.94 billion barrels top of a water section called the aquifer. The aquifer can be large,
many times the size of the oil- or gas-bearing reservoir, or it can
(308 million m3) of crude oil and 3.14 trillion cubic be small in which the water pressure will exhaust itself before
feet (88.2 billion m3) of natural gas have been pro- another drainage mechanism arises. If the aquifer is large, water
duced offshore Newfoundland (Table 3; Fig. 15). expansion will last a long time and displace a large portion of the
oil and gas before wells water out.
Table 2. Development well cost statistics at Terra Nova, White Rose, and North Amethyst, 1999–2019. Source: Data from C-NLOPB
Terra Novac White Rosec North Amethystc
Production wellsa
Drilling, $million/well 71.5 (7) 71.0 (17) 69.6 (9)
Completion, $million/well 37.5 (5) 27.8 (11) 35.9 (7)
D&C, $million/well 80.8 (17) 95.8 (11) 103.7 (9)
Drilling per meter, $1000/m 16.3 (7) 13.0 (17) 13.9 (9)
D&C per meter, $1000/m 18.9 (17) 17.6 (11) 20.5 (7)
Injection wellsa,b
D&C, $million/well 52.0 (10) 84.3 (12) 116.1 (4)
D&C per meter, $1000/m 11.1 (10) 15.1 (12) 31.1 (4)
All wellsa
D&C, $million/well 69.3 (27) 89.4 (23) 107.7 (12)
D&C per meter, $1000/m 15.9 (27) 16.3 (23) 24.0 (12)
a
Drilling, completion, and drilling and completion (D&C) categories are not mutually exclusive, and one well may be included in more than
one category if final costs are reported in those categories. Suspended wells of indeterminate status and abandoned wells are not
considered. Abandoned producer and injector well cost is included in analysis but without the abandonment cost component
b
Injection wells include water and gas injectors
c
The first term in each column entry is the inflation-adjusted average cost in 2019 Canadian dollars, and the number in parenthesis is the
sample size. Samples less than five may not be representative
10 Gas disposition and water injection totals per

9
project through March 31, 2018, are shown in Ta-
Number of Producer Wells
8
7 ble 4. Hebron data are not depicted because the
6
5
field only came on-stream in late 2017. Note that gas
4 flared, fuel, and injected totals 2782 Bcf (79 billion
3
m3), and are equal to gas production, since lift gas is
2
1 recirculated within the system. About 7% of gas
0 production has been flared and another 8% used for
30-60 60-90 90-120 120-150 >150
Drilling and Compleon Cost ($million) fuel, with the remaining 85% reinjected. Gas rein-
jection is used to maintain reservoir pressure and
Terra Nova White Rose North Amethyst
displace the oil, and with the gas stored it may be
7
recovered in the future.
Water is injected into formations for voidance
Number of Injector Wells
5 replacement in aquifer drive reservoirs, and normal

4 practice is to inject volumes approximately equal to
3 the oil and water volumes produced. Through March
2 31, 2018, 1760 MMbbl oil and 1122 MMbbl water
1 (279 million m3 oil and 178 million m3 water) was
0 produced, or 2882 MMbbl (457 million m3) fluids
<30 30-60 60-90 90-120 120-150 >150
total, and 2927 MMbbl (464 million m3) water was
Drilling & Compleon Cost ($million)
injected. On a field basis, injection-to-production
Terra Nova White Rose North Amethyst ratios range from 0.73 at White Rose to 1.06 at
Figure 14. Drilling and completion cost distribution for Hibernia. For additional background on produced
producer (top) and injector (bottom) wells in FPSO water, water and gas injection requirements off-
developments offshore Newfoundland, 1999–2019. Source: shore, see Appendix C.
Data from C-NLOPB.
1266 Kaiser
Table 3. Cumulative production offshore Newfoundland through March 2020. Source: Data from C-NLOPB
Field Reservoir First Oil Gas Water

Production (MMbbl) (Bcf) (MMbbl)
Hibernia Hibernia 1997 1034 1861 598

Avalon 2000 104 54 39
Catalina 2013 2 1 –
Subtotal 1140 1916 636
Hebron Ben Nevis 2017 72 30 2
Terra Nova Jeanne dArc 2002 425 842 379
White Rose Ben Nevis/Avalon 2005 148 302 155
North Amethyst Ben Nevis/Avalon 2010 51 38 77
Hibernia 2016 4 8 1
Subtotal 55 46 78
Total 1940 3137 1249
160
140
120
Producon (MMbbl)
100
80
60
40
20
0
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
19
19
19
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Hibernia Terra Nova White Rose Hebron
Figure 15. Oil production offshore Newfoundland, 1997–2019. Source: Data from C-NLOPB.
160 Petroleum reserves offshore Newfoundland are

140
estimated at 3.34 billion barrels (530 million m3),
120
with resources estimated at 573 MMbbl oil, 8.3 Tcf
Producon (MMbbl)
100
natural gas, and 397 MMbbl NGLs [91 million m3
80
oil, 235 billion m3 gas, 63 million m3 NGLs] (Ta-
60
ble 5). The Labrador shelf is believed to have sub-
40
stantial gas resources, but to date discoveries have
20
been small. The most promising areas for new dis-
0
coveries are east and north of the Jeanne dArc
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Oil Water
basin where several deposits have been found
(Fig. 2).
Figure 16. Total oil and produced water volumes offshore
Equinor Canadas proposed exploration drilling
Newfoundland, 1997–2019. Source: Data from C-NLOPB.
project in the Flemish Pass basin was approved in
2019 (Canadian Environmental Assessment Agency
2020a), but with the impact of Covid-19 on global oil 24 offshore wells (six per exploration license) be-
demand and prices, these plans were in review in tween 2019 and 2027.
late 2020. Equinor Canada proposed drilling up to In September 2020, three additional proposed
projects by three different operators were under
review by the Impact Assessment Agency of Cana-
70 da: BHP Canada, Central Ridge and West Flemish
60 Pass, all located approximately 350–375 km east of
Producon (MMbbl)
50 St. Johns, Newfoundland (Canadian Environmental

40 Assessment Agency 2020b). The first step of federal
30 environmental assessment is a public consultation
20 process and environmental evaluation. After the
10 consultation process and environmental review is
0
completed, if the economic and operator conditions
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (e.g., corporate budget) are still suitable, wells will
Oil Water be drilled in accordance with the drilling plans.
45
40
Table 5. Petroleum reserves and resources offshore Newfoundland
Producon (MMbbl)
35
and Labrador. Source: C-NLOPB Annual Report 2015–2016
30
25
Oil Gas NGLc
20
(MMbbl) (Bcf) (MMbbl)
15
10 Grand Banks
5 Reservesa 3336
0 Resourcesb 573 8322 397
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Labrador shelf
Oil Water Resources 4244 123
Total 3909 12,566 520
45
a
40 Reserves are volumes of hydrocarbon proven by drilling, testing,
and interpretation of geological, geophysical, and engineering
Producon (MMbbl)
35
30 data, that are recoverable using current technology and under
25 present and anticipated economic conditions
b
20 Resources are volumes of hydrocarbons, expressed at 50 percent
15 probability, assessed to be technically recoverable that have not
10 been delineated and have unknown economic viability
c
5 Natural gas liquids (NGLs) are derived from the components of
0 natural gas that include ethane, propane, butanes, pentanes and
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
higher, which is the portion of petroleum that exists in either the
Oil Water gaseous phase or in solution in crude oil in reservoirs. The light
Figure 17. Oil and water production at Hibernia (top), Terra gases ethane, propane, and butanes can be made liquid by cooling
Nova (middle), and White Rose (bottom), 2006–2018. and adding pressure. Naphtha and condensate are composed
Source: Data from C-NLOPB. primarily of pentanes plus and are liquid at room temperature
Table 4. Field production statistics cumulative to March 31, 2018. Source: C-NLOPB Annual Report 2017–2018
Production Unit Hibernia Terra Nova White Rose/North Amethyst Total
Oil MMbbl 1067 406 236/51 1760

Gas Bcf 1747 740 256/41 2784
Water MMbbl 583 331 142/66 1122
Gas disposition
Flared Bcf 95 61 36/4 196
Fuel Bcf 108 67 36/7 218
Injected Bcf 1544 611 183/30 2368
Lift Bcf 6 120 105/43 274
Water injected MMbbl 1558 725 515/129 2927
1268 Kaiser
Figure 18. Cross section of glory hole at Terra Nova. Source: SUT 1998.
DEVELOPMENT TRADE-OFFS tion), and for complex completions cost can be as

large as drilling. Horizontal wells, usually defined by
Development Plan an angle at least 80% to the vertical, typically cost at
least twice as much as vertical wells per meter.
The number and type of development well are Three-dimensional and extended reach well17 cost
key design parameters in every offshore develop- may be up to five times as much as a directional well
ment. Engineers determine how wide wells should of the same length. Most offshore development wells
be spaced without suffering any significant loss of drilled from a platform rig are directional, and be-
reserves. Major fields will usually have many pro- cause many wells are drilled in sequence, learning
ductive fault blocks and numerous pay sands and occurs, and performance typically improves.
require dozens of wells to develop. Reservoir sands
that are deep and compact will require a smaller
number of wells than a thin reservoir that is spread Dry Tree vs. Wet Tree Wells
over a large areal extent. If there are faults and
reservoirs are isolated, more wells will be required A dry tree well has its tree18 above the water-
to reach these locations. Development drilling will line and is accessible from the platform, allowing
occur throughout a fields life as producing zones are direct access from a platform rig or MODU. Pro-
plugged back and sidetracks drilled. Phased devel- duction from dry tree wells flows from the reservoir
opments are often the preferred strategy for com- through the conductor to the rig floor. Wet (subsea)
plex reservoirs or where the operator wants to limit wells have their trees located on the seafloor, either
initial development costs. The depletion plan of directly below the platform or offset from the plat-
some developments may feature wells whose service form. In iceberg-prone areas in water depth less than
changes during the life of the field, e.g., production 100 m, wet wells are placed in excavated glory
wells converting to injection wells, water injection holes19 to protect the wellheads and trees from
wells converting to gas injection, and in a few cases, scouring icebergs (Fig. 18). A MODU is needed to
delineation wells repurposed for development. access subsea wells, and flowlines/risers are used to
Development wells are more complex than transport production to the facility for processing.
exploration wells and usually more expensive to There is no subsea infrastructure cost for dry
drill, not only because of their trajectories but be- tree wells but major construction and completion
cause they must be completed (readied for produc- challenges to overcome in reaching target using
17
Three-dimensional wells are drilled outside a vertical plane and 18
Trees (also called Christmas trees) are located on the top of
make one or more azimuthal turns in their trajectory. An
each well and function as a flow control device and injection point
extended reach well has a long offset relative to vertical depth,
for chemicals that enter the well, reservoir, and flowline.
usually defined by the horizontal displacement (HD) to total
19
vertical depth (TVD) ratio greater than two, HD/TVD > 2. In shallow water, glory hole areas are dredged to a depth of 10–
Extended reach wells are expensive to drill and require high-spec 15 m below the seabed to provide adequate cover to subsea
rigs and state-of-the-art technology, and extensive planning and equipment. In deeper water, glory holes for subsea wells are not
risk management (Paila et al. 2019). needed since icebergs cannot grow to a size to scour the seabed.
directional and extended reach wells. Dry tree wells

allow easy access for maintenance and repair, as well
as for future sidetracking operations. In comparison
with wet tree wells, dry tree wells have lower life
cycle operating cost and can extract more resource
because of the ability to intervene in the well on an
as-needed basis at minimal cost (Reid et al. 2013).
Subsea wells are more expensive to equip,
workover, operate, and decommission than dry tree Figure 19. Depth chart of Hibernia and Ben Nevis reservoirs
wells and will be abandoned at a higher production at the Hibernia field development.
rate, for all things equal, because of the back pres-
sure that arises delivering the fluid to the host and
less frequent interventions to maintain the wells specific mass limit (Widinato et al. 2013) and minor
productivity. For empirical data on the difference coverage of pack ice; if pack ice coverage is preva-
between dry tree and wet tree economic limits in the lent and thick, a protective berm or similar
deepwater US Gulf of Mexico, see Kaiser and Narra requirement will be needed like at Kashagan (Kaiser
(2019). Subsea wells also have greater difficulty 2021).
flowing with high water cuts because of hydrate Most GBS designs have a base caisson for oil
formation, and if gas lift or subsea compression is storage and shafts penetrating the water surface to
used to flow to a lower abandonment pressure, flow give support for the topside structures, and to serve
assurance issues may result. for drilling, risers, and utility systems for offloading
For subsea wells, the number and location of and ballast operations. In the first generation of
drill centers is a compromise between drilling GBSs, grout was normally placed under the platform
operations, flow assurance, subsea cost, and future to secure full contact between underside and seabed,
development. Access to the wellbore is only avail- but in the second generation of GBSs, more
able from a MODU mobilization, which is expensive sophisticated systems were employed including
and can hinder reservoir development. Flow assur- potential refloat (Hjelde 2004).
ance is a significant operational issue and compli- FPSO facilities comprise a ship-shaped vessel
cation since fluid must be transported along (or held on location by a mooring system anchored to
underneath) the seafloor in flowlines to reach the the seabed. If an FPSO operates in a hurricane or
host. Flow assurance requires use of chemicals, iceberg-prone area, the vessel may be specified with
electrohydraulics for control, and regular pigging a disconnectable turret20 to allow the FPSO to dis-
operations that increase operational cost and com- connect from its wells and move offsite. Well fluid is
plexity. All reinjected fluids must also be trans- transferred using flowlines and risers and is pro-
ported in flowlines along the seabed. cessed by equipment mounted on the deck. Pro-
duced oil is stored in tanks in the hull, awaiting
transfer to shuttle tankers through an offloading
GBS VS. FPSO system. If water and gas injection is employed, it will
be treated onboard the vessel and then transferred
A gravity-base structure is a structure capable via risers/flowlines to the reservoir.
of withstanding the environmental forces to which it The most important distinction between GBS
is exposed during its lifetime by its own weight. and FPSO development concepts is how drilling is
Gravity platforms may be built of concrete or steel performed. GBS developments allow the use of dry
or a combination of the two, but most of the gravity
structures constructed for oil and gas development
are concrete and are stabilized by skirts that pene- 20
Turret systems generally provide four main functions: (i)
trate the seabed. Concrete GBSs have a large foot- weather vaning, (ii) disconnection and reconnection between
print to minimize soil-bearing loads and, to provide the FPSO and its moorings and risers, (iii) fluid transfer systems to
buoyancy for transportation, have large enclosed and from the wells and facility, and (iv) interface for control
systems and utilities for subsea systems. In weather vaning, the
volumes which can be used to store oil and other vessel rotates around the turret to take up a position of least
liquids. GBS developments in an iceberg environ- resistance to the weather with the bow heading into the prevailing
ment are designed to withstand icebergs up to a wind and waves assisted by thrusters.
1270 Kaiser
tree wells drilled and completed from a platform rig

and can also use wet wells if reservoir targets are
beyond the capability of the platform rigs, whereas
FPSOs do not allow drilling (or workovers) from the
vessel and require subsea (wet tree) wells drilled and
completed from a MODU. A GBS for drilling can
be used in conjunction with an FPSO to obtain the
benefit of dry tree wells.
Subsea facilities at each drill center incorporate
manifold systems to comingle the flow from the
production wells, distribute gas lift to the production
wells, and distribute water and produced gas to the
water and gas injection wells. Divers and/or re-
motely operated vehicle (ROV) technology with
marine vessels are used for maintenance, repair, and
retrieval of the subsea production system.
Subsea chemical injection is achieved using
umbilicals from the host transporting methanol, Figure 20. Hibernia field development and offloading system
scale inhibitor, asphaltene inhibitor, and wax in- schematic. Source: SEC.
hibitor/dissolver to the drill centers. Methanol is
normally injected at the Christmas tree, while pro-
duction chemicals can be injected either at the tree The Hibernia GBS is a cylindrical concrete
or downhole. Deaerated seawater is injected into oil caisson that extends from the seabed to 5 m above
zones for pressure maintenance. Electrohydraulic the waterline and designed to resist an iceberg im-
umbilicals to each manifold convey the required pact up to 6 million tonnes21 (Fig. 20). Four shafts
hydraulic fluid, chemicals, power, and communica- extend 26 m above the caisson to support the deck
tion signals necessary to operate the tree valves and and topsides weighing 60,000 t. The platform stands
monitor downhole and tree-mounted instrumenta- 224 m high, which is half the height of New Yorks
tion. Empire State Building (449 m), and topsides facili-
ties allow simultaneous drilling and production.
Accommodations are for 185–270 personnel (Ta-
PROJECTS ble 6).
A 15-m thick ice wall forms the perimeter of the
Hibernia caisson and has 16 teeth designed to dissipate the
impact energy of an iceberg to an interior tie wall
The Hibernia field was discovered in 1979 and (Fig. 21). The cells of the wall are filled with sea
delineated by nine wells over 5 years (Smith 1997). water and solid ballast. There are two drill shafts, a
The two main reservoirs, the Hibernia and the Ben riser shaft, and a utility shaft; the utility shaft is
Nevis/Avalon, are located at average depths of 3700 permanently dry. The shafts are connected with
and 2400 m, respectively (Fig. 19), with the Hibernia walls and compartmentalize the interior of the
reservoir estimated to contain over 80% of the caisson into six oil storage cells of 207,000 m3
recoverable oil. From the onset, the project was (1.3 MMbbl) capacity.
expected to require frequent wellbore intervention The Hibernia Southern Extension is a subsea
and extended reach wells, thus strongly favoring a development about 7 km southeast of the GBS that
GBS development despite higher investment cost included five production wells and six water injec-
(Elsborg et al. 2005). tion subsea wells for pressure support. The produc-
tion wells were drilled from the GBS platform rigs,
and the injection22 subsea wells were drilled by a
21
MODU.
The largest iceberg that could approach the platform is
estimated to weigh 6 million tonnes and occur once every
22
10,000 years. Smaller icebergs weighing 1 million tonnes are The injection wells were drilled straight down to target using
estimated to occur once every 500 years. relatively simple designs.
Table 6. Offshore Newfoundland production facility equipment capacity. Source: Industry publications
Capacity Hibernia Terra Nova White Rose Hebron
Oil (Mbpd) 230 150 140 150

Produced water (Mbpd) 250 135 175 283
Water injection (Mbpd) 300 180 280 370
Gas compression (MMcfpd) 200 260 200 235
Power (MW) 90 90 90 98
Person on board (#) 185–270 80–100 90–110 220–330
Storage capacity (Mbbl) 1300 960 850 1200
Equipment capacity is the latest year reported and may change over time as production requirements change. Most offshore equipment can
be expanded by replacement or removing bottlenecks
Figure 21. Ice belt, shafts for drilling and utilities, and oil
storage compartments. Source: Hoff et al. (1994).
Figure 22. Hibernia field well locations, Hibernia reservoir.
Faults on Hibernia top L3b sandstone. Source: C-NLOPB.
The Hibernia reservoir is highly faulted and

consists of multiple, stacked fluvial channels and
sand bars. A total of 64 well slots are available, and are also involved in well construction cost (Kaiser
circa 2020 almost all of these were in use (Fig. 22). and Pulsipher 2007).
Most fault blocks have been developed with A combination of water flooding and gas rein-
remaining targets including smaller blocks and infill jection is used to maximize recovery and is common
well opportunities (Lawrence et al. 2013). At the to all projects in the region. Oil is transferred from
time of drilling, Hibernia wells expanded the ex- the platform to shuttle tankers via an offshore
tended reach envelope of the industry and continue loading system which consists of subsea pipelines, a
to expand the envelope as shown in Figure 23 subsurface buoy, and flexible loading hoses. Two
(Woodfine et al. 2011). Drilling cost generally in- tankers with a cargo capacity of 850,000 barrels
creases with HD/TVD ratio, but many other factors (135,000 m3) are used to ship crude directly to
market or to a transshipment terminal located in
Placentia Bay, Newfoundland.
1272 Kaiser
Figure 26. Terra Nova major fault blocks. Source: Suncor.
Figure 23. Extended reach drilling at Hibernia circa 2011 vessel using flexible flowlines/risers (Fig. 24). Four
relative to world database showing total vertical depth versus drill centers called North West (NWDC), South
horizontal displacement in meters. Source: Hibernia West (SWDC), North East (NEDC), and South East
Management and Development Company. (SEDC) are employed, each approximately 5 km
away from the FPSO (Fig. 25). The colored lines in
Fig. 25 indicate the type of flowline as production,
gas lift, water injection, gas lift. The SE drill center is
for water injection only (Haugen et al. 2007).
The field is divided by faults into more than two
dozen connected tank units, and most units or fault
blocks hold an injector–producer well pair (Stephens
et al. 2000). Most of the producer wells are deviated,
and most injectors are vertical or close to vertical
(Fig. 26). Three long reach wells have 4–5 km offset
and 6–7 km measured depth.
The FPSO vessel has a length of 292 m, a beam
of 45.5 m, and a depth of 28.2 m (Lever et al. 2001).
Figure 24. Terra Nova development schematic with subsea The mooring system consists of nine anchor legs in
tiebacks and glory holes. Source: Suncor. 3 9 3 arrangements, each group 120 degrees apart.
The FPSO has five 5 MW thrusters, two at the bow
and three at the stern, for position location and
offsite movement.
The turret mooring system was designed to
maintain station in the 100-year storm and to be
disconnectable to avoid collision with icebergs with
a mass greater than 100,000 t or pack ice greater
than 5/10 coverage and 0.3 m thick (Howell et al.
2001). A controlled disconnect can be accomplished
in waves up to 7.5 m significant height in 4 h, with all
risers flushed and depressurized. An emergency
disconnect can be accomplished in 15 min.
The turret is 70 m from the bottom of the spider
Figure 25. Terra Nova subsea layout. Source: Suncor. buoy to the swivel stack (Fig. 27), and once the
FPSO disconnects, the mooring and riser system is
Terra Nova supported by the spider buoy at 35 m below sea le-
vel. At the main deck, the turret diameter is 12 m
The Terra Nova development is based on sub- and at the vessel keel 22 m. When the spider buoy is
sea tieback wells drilled in excavated glory holes and released from the lower turret, it free-falls to its
tied back to a double-hulled ice-strengthened FPSO design depth.
Figure 27. Terra Nova turret general arrangement. Source: Suncor.
White Rose duction wells in the South Avalon reservoir and 11

water and gas injection wells (Pardy et al. 2013).
The White Rose development employed an Produced associated gas minus gas lift and fuel gas is
FPSO facility, like that selected for Terra Nova, with reinjected into a gas cap in the northern part of the
glory holes and a disconnectable turret (Norman field to maintain reservoir pressure and for possible
et al. 2008). Initial development required 14 pro- future extraction. The Northern pools and West
1274 Kaiser
Figure 28. White Rose complex Avalon pools. Source: White Rose DA volume 2 (development plan).
Avalon extension has a thick gas accumulation and a drilling rig intended to improve drilling efficiency,
thinner, less extensive, oil leg (Fig. 28). lower operating costs, and extract a larger portion of
The West White Rose project was proposed to the resource, but the project is currently suspended
access resources in the West Avalon pool using a and future operations under review. If sanctioned,
concrete gravity wellhead platform produced back the concrete GBS is expected to be 145 m high and
to the FPSO. The wellhead platform would host a
before the decision to proceed was made in 2012

with a concrete GBS and offloading system (Fig. 29)
(Wolfe et al. 2018).
Three rotated fault blocks define the structural
framework of the Hebron field (Fig. 30). Within the
three main fault blocks are three main reservoirs,
and five hydrocarbon pools define separate accu-
mulations (Cornaglia and McNeill 2018). The initial
development phase focuses on the Hebron fault
block and its three vertically separated reservoirs
Ben Nevis (Pool 1), Hibernia (Pool 5), and Jeanne
dArc (Pool 4).
The largest reservoir is the Hebron Ben Nevis
reservoir unit (Pool 1) and accounts for 80% of the
total recoverable project reserves. Hebron Ben Ne-
vis reservoir oil is 20° API, and it is significantly
denser than Hibernia crude. The Hebron Hibernia
reservoir (Pool 5) and Hebron Jeanne dArc reser-
voir (Pool 4) are of higher quality than Hebron Ben
Nevis but more difficult to access. The Ben Nevis
reservoir (Pool 3) is expected to be developed as a
subsea tieback at a later date.
The Pool 1 Ben Nevis reservoir is the focus of
Figure 29. Hebron drilling, production and storage gravity- the development and requires extended reach pro-
base structure. Source: Hebron DA volume 2 (development ducers drilled from the platform and completed with
plan) September 2011. up to 1500-m open-hole gravel packs to mitigate
sand control issues. A series of peripheral water
injectors is used in development, and solution gas
will be stored in Pool 2 Ben Nevis reservoir and
produced again later in field life when gas require-
ments exceed production from the field. The deeper
Pools 4 and 5 will be developed at a later stage but
are not expected to contribute significantly to total
production.
Hebrons upper wells encounter degraded
reservoir properties, while the lower wells are lo-
cated in the best part of the reservoir but closer to
the oil–water contact, exposing them to a higher risk
of early water breakthrough. To mitigate the water
Figure 30. Schematic cross section across the Hebron
production rate uncertainty, the facilities were de-
project area. Source: Hebron DA volume 2 (development signed with robust water handling capability.
plan) September 2011.
DEVELOPMENT COST
weigh 210,000 tonnes, with total platform height
241 m and operating weight 30,000 ton. Economic Measure
Unit development cost provides a rough indi-

Hebron cation of the economic viability of a project and is a
useful metric to compute prior to more advanced
After initial discovery in 1980, field delineation cash flow modeling (Gallun et al. 2001). There are
and appraisal stretched over a period of 19 years several ways to compute unit development cost, but
1276 Kaiser
probably the most common method combines esti- Spending Plans

mated total capital spending plus operating costs
over the production life cycle divided by the ex- Operators sometimes report capital spending
pected ultimate recoverable reserves (EUR): and operating cost estimates in development plans
submitted to regulators. In the absence of better
Capital spending þ Operating expenditures
: information, these data may be matched against
Expected ultimate recoverable reserves actual activity levels, but appropriate caution should
All quantities in both numerator and denomi- be exercised in interpreting results since this is a
nator are expected values at the time of evaluation, gross approximation based on unverified data that is
usually project sanction or near the start of pro- potentially unreliable.
duction, but can also occur later when better esti- For example, comparing White Rose capital
mates are available. Capital spending and operating spending estimates shown in Table 9 with the actual
expenditures are usually not discounted, but for number of wells drilled during the time period leads
comparisons, inflation adjustment is suggested. to an inferred cost of $35 million per development
Exploration costs are sunk costs and are usually well (unadjusted) and a life cycle production cost
not included in development cost metrics. EUR is (excluding transportation cost) of $4.2/bbl. These
usually interpreted as initial proved plus probable well cost estimates are about two to three times less
reserves (2P) estimated using P50 probability. At the than the actual development costs shown in Table 2.
start of development, 2P reserves and life cycle cost Hebron operating expenditures shown in Table 10
are uncertain, but with the passage of time both leads to a production cost estimate of $9.8/bbl.
become better known. Near the end of production, ExxonMobil reported capital and expenditure
EUR and cumulative production coincide. cost for the Hebron GBS development and for the
On a regional level, Newfoundland unit devel- Pool 3 subsea23 development (Table 11). Total
opment cost through 2020 based on the aggregate construction cost for the GBS was estimated at
inflation-adjusted data described in the Introduction about $6.5 billion, development wells cost $1.9 bil-
yields: lion, and life cycle production cost $5.9 billion.
Using this information, along with the reported/ex-
ð$33 þ $30Þ billion
¼ $32:5=bbl pected 19 producing wells and 7 gas/water injection
1:94 Bbbl wells required in initial development, leads to an
Life cycle development cost applies total reserves average unadjusted development well cost of $73
and an assumed additional $10 billion in future million ($1900 million/26 wells).
production costs to yield:
ð$33 þ $30 þ $10Þ billion EMPLOYMENT
¼ $22:2=bbl:
3:3 Bbbl
At a project level, total capital and operating Labor
costs estimated by operators at the time of project
sanction and adjusted to 2019 ranged from $4.8 bil- Labor costs in offshore oil and gas operations
lion at White Rose to $16.6 billion at Hebron (Ta- are a significant expense (Kaiser 2019). Labor costs
ble 7). The capital expenditures for GBS structures include the salary of employees who are directly
are two to three times greater than FPSO vessels. involved in production activities, services such as
For Hibernia, life cycle operating cost is less than general repairs and maintenance, and supervision.
half of capital cost, but for Hebron, costs escalated Payroll and benefits for corporate staff are usually
to over two-thirds capital cost. Larger projects with not included, but employee benefits, such as insur-
greater reserves are expected to have lower unit ance and medical service, may be included (Gallun
development cost, but variability is large (Table 8).
Unit development cost ranged from $8/bbl (Hiber-
nia) to $24/bbl (Hebron). 23
Pool 3 reserves are expected to be tied back to the GBS at a
cost of $1.7 billion in construction and $1.8 billion in development
drilling. Operations cost depend upon the timing of first produc-
tion and are likely to be incremental if overlapping with the GBS
production.
Table 7. Capital and operating cost estimates in million Canadian dollarsa at time of project sanction and inflation adjusted to 2019
Hibernia Terra Nova White Roseb Hebronc
Administration 30 1575
Drilling 1000 700 1887
Facilities 4400d 1114 4873d
Subsea 314
Total capital costs 5400 2600 2158 8334
Operating costs 2600 1900 1177 5883
Total costs 8000 4500 3335 14,217
Adj. capital costse 8640 3718 3086 9751
Adj. operating costse 4160 2717 1683 6883
Adj. total costse 12,800 6435 4769 16,634
a
Hibernia cost reported in 1995 Canadian dollars, Terra Nova and White Rose in 2001 Canadian dollars, Hebron in 2011 Canadian dollars
b
See also Table 9
c
See also Tables 10 and 11
d
Facilities include platform, topsides, and offshore loading system
e
Inflation-adjusted to 2019 Canadian dollars
Table 8. Unit cost metrics inflation-adjusted to 2019. Source: Project development applications
Hibernia Terra Nova White Rose Hebron
CAPEX ($billion) 8.6 3.7 3.1 9.8

OPEX ($billion) 4.2 2.7 1.7 6.9
Total costa ($billion) 12.8 6.4 4.8 16.6
EURb (MMbbl) 1644 506 404c 707
CAPEXd ($/bbl) 5.2 7.3 7.7 13.9
OPEXd ($/bbl) 2.6 5.3 4.2 9.8
Totald ($/bbl) 7.8 12.6 11.9 23.7
a
See Table 7 for adjusted and unadjusted estimated capital and operational expenditures
b
EUR c.2020, interpreted as proved plus probable reserves (2P) and P50 estimates
c
Does not include North Amethyst reserves or the proposed West White Rose extension
d
Capital expenditures and operating cost at the time of project sanction are not discounted but have been adjusted for inflation to 2019
Expenses ($MM), Person Hours (1000)
et al. 2001). Some benefits are required by local laws 7000

and benefit packages vary by company. 6000
All producing facilities offshore Newfoundland 5000
are manned 24 h a day by two crews working on 12-
4000
h shifts on a 14- or 21-day schedule. During well
3000
intervention and drilling operations or significant
2000
upgrades, head counts will increase. Personnel rep-
resent a significant fixed cost associated with pro- 1000
duction and influence many other cost components 0

1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
such as personnel logistics and catering.

Person Hours Expenditures
Figure 31. Total production expense and operations person-

Head Counts hours at Newfoundlands offshore developments, 1997–2017.
Source: C-NLOPB.
Operators are required to file an annual benefits
report to C-NLOPB summarizing employment for
operations and construction separately. At the end 1105, and Hebron 1162 (Table 12). Reported per-
of 2019, the head count for oil and gas operations sons are directly employed and include operator and
offshore Newfoundland totaled 4520—Hibernia had contractor personnel. Personnel are typically orga-
a head count of 1400, Terra Nova 853, White Rose nized into different groups such as field manage-
1278 Kaiser
Person-Hours and Head Counts vs. Production

2500
Expenditures
Expenses ($MM), FTE (#)
2000
1500
In 1997, about 1.6 million person-hours were
required in operations, which increased to about 5.3
1000 million person-hours in 2017–2018 as more facilities
500
have been installed. As one might expect, produc-
tion expenditures relate to person-hours worked
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
(Fig. 31), and robust relationships hold at individual
FTE Expenditures
fields using head counts (Fig. 32).
Roughly speaking, at a regional level about
1600 one-third of total person-hours worked per year
1400 approximate annual expenditures in million dollars.
1200 For producing fields, about 40 to 50 percent of total

1000 head count approximates operator expenditures in
800 million dollars:
600 ExpendituresNF = 0.37 Æ Person-hours, R2 = 0.87.
400
ExpendituresHib = 0.47 Æ Head count, R2 = 0.75.
200
ExpendituresTN = 0.47 Æ Head count, R2 = 0.54.
ExpendituresWR = 0.42 Æ Head count, R2 = 0.87.
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
FTE Expenditures
3500 Labor Contribution to Production Expenditures

3000
2500 Using 2020 workforce levels, and assuming

2000 salaries of $200,000 for management, $150,000 for
1500
engineers, marine crew, and skilled trades, and
1000
$100,000 for all other employees yields a total labor
500
cost of about $595 million, about 25% of the total
production expenditures in 2020.
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
FTE Expenditures
Figure 32. Production expenditures in million dollars and

PRODUCTION COST
head counts at the end of each reporting period; Hibernia
(top), Terra Nova (middle), and White Rose (bottom), 2006– Operating Cost vs. Capital Expenditure
2018. Source: C-NLOPB.
Capital expenditures (CAPEX) represent the
investment required to design, construct, and com-
ment, production crew, multi-skill personnel such as mission the hardware for field development, and
mechanics and electricians, roustabouts, house- include the wells, platforms, facilities, equipment,
keeping, and catering. Construction activity ceases pipelines, and everything else with a lifetime greater
with the start of operations. than one year. CAPEX is typically defined as those
Year-end head count differs from full-time items whose useful life exceeds one year, and as
equivalent data reported as person-hours because it such, tax regulations require each item be depreci-
represents a point in time as opposed to all ated on a specific schedule when computing net in-
employment activity over the full year. Onshore come (Gallun et al. 2001). In contrast, operating
staffing and support for offshore operations is about expenditures (OPEX), also referred to as lease
the same size as offshore requirements for each operating expenses, lifting cost or production cost,
producing field. represent items whose useful life is one year or less
and costs are expensed for accounts.
Table 9. White Rose development capital and operating cost estimates. Source: White Rose development application
Year Production Pre-production ($million) Post-prod. Total Operating
(1000 m3) Admin. Drilling Facilities Subsea ($million) ($million) ($million)
1 10 111 121
2 10 115 390 82 597
3 10 155 390 150 705
4 4000 41 223 82 114 460 59
5 5340 155 155 83
6 5340 129 120 89
7 5340 92
8 4780 99
9 3160 100
10 2060 97
11 1480 86
12 1150 77
13 940 71
14 760 63
15 650 57
16 570 51
17 480 49
18 350 104
19
20
Total 36,400 30 311 1114 314 389 2158 1177
Data reported in Canadian dollars at the time the development application was submitted and not adjusted for inflation. Operating costs
exclude crude transportation costs. The final year operating costs include $41 million for abandonment of the facility and wells. The FPSO
salvage value is estimated at $40 million
Unlike capital expenditures, operating cost is the changes in commodity prices that occur over the
generally much less transparent, and public data life of the asset.
come in widely different forms and quality (Kaiser
2019). Site-specific attributes need to be accounted
for, most of which are not observable or known, and Unit Operating Cost
can only be inferred with a high degree of uncer-
tainty. The North Sea, both the UK and Norwegian Production cost is usually defined as lifting cost
sectors, is a notable exception and provides reliable plus gathering and transportation costs and may or
and transparent offshore operating cost data. New- may not include production taxes (Gallun et al.
foundland production cost is much better than the 2001). These costs are all short term, less than
U.S. Gulf of Mexico, but not as good as the North one year in duration, and incurred in operations.
Sea because of mixing issues described below. Since gathering and transportation costs and pro-
For offshore development, most capital expen- duction taxes are often small on a relative basis,
ditures occur upfront in the exploration and devel- their inclusion or exclusion will usually not signifi-
opment stage, with facility construction/installation cantly impact the metric. Formally, unit operating
and development well drilling, whereas operating cost is calculated as the ratio of annual operating
costs start at first production and run through the life cost divided by annual sales production on a boe or
cycle of the field. For developments where drilling Mcfe basis:
requires a structure to proceed, such as occurs with
Direct operating cost ð$Þ
GBSs, significant drilling cost will be incurred after Unit cost ð$=boeÞ ¼ :
first production. Because OPEX occurs over a Sales production ðboeÞ
longer period compared to CAPEX and its annual If sales are exclusively or predominately oil or
amounts are small in comparison, its impact to gas, primary production units are employed. Life
profitability is usually less significant than the cycle unit operating cost is computed using the same
schedule and cost overruns that impact CAPEX and formula but on a cumulative undiscounted basis.
1280 Kaiser
Table 10. Hebron platform development capital and operating cost estimates. Source: Hebron development application
Year Pre-production ($million) Drilling Total Operations
Admin. Topsides GBS OLS ($million) ($million)
2010 68 12 13 0 93 1
2011 174 394 240 0 807 9
2012 244 704 291 12 1252 11
2013 216 698 391 36 1340 14
2014 290 643 444 107 1484 20
2015 327 409 234 69 1039 36
2016 256 175 0 82 513 65
2017 222 222 157
2018 236 236 147
2019 242 242 148
2020 242 242 174
2021 242 242 159
2022 218 218 159
2023 189 189 159
2024 215 215 179
2025 159
2026 161
2027 164
2028 187
2029 176
2030 196
2031 194
2032 210
2033 190
2034 188
2035 186
2036 202
2037 182
2038 181
2039 179
2040 197
2041 180
2042 180
2043 180
2044 187
2045 176
2046 592
Total 1575 2861 1788 224 1887 8334 5883
Data reported in Canadian dollars at the time the development application was submitted and not adjusted for inflation. Operating costs
exclude crude transportation costs. The final year operating costs include $430 million for abandonment of the facility and wells
Table 11. Hebron costs with Pool 3 development in million dollars. Source: Hebron development application
Admin. Topsides GBS OLS Construction Drilling Operations
GBS 1575 2881 1788 224 6468 1887 5883

Pool 3 250 465 1015 1730 1780
Total 1825 3346 2803 224 8198 3667 5883
Data reported in Canadian dollars at the time the development application was submitted and not adjusted for inflation. OLS = offshore
loading system. Construction = Admin + Topsides + GBS + OLS
Table 12. Project employment as of December 31, 2019. Source: Canada–Newfoundland and Labrador benefits reports
Occupation Hibernia Terra Nova White Rose Hebron Total
Administration 80 65 56 55 256
Engineers 135 151 146 100 532
Management 169 91 67 117 444
Marine crew 126 205 331
Other field services 219 70 120 22 431
Professionals 223 103 224 198 748
Skilled trades 337 138 110 316 901
Technicians 150 92 177 151 570
Other 265 265
Total 1400 853 1105 1162 4520
Normalized Production Expenditures Life Cycle Operating Cost and Development Well
Cost Relationship
C-NLOPB assigns all expenditures after first
production to the production cost category which is To estimate operating cost according to its
problematic from an accounting perspective since standard formulation (i.e., no capitalized expendi-
expenditures for both short-term and long-lasting tures), capitalized items in the production expendi-
items (e.g., new wells) are mixed, and because of this ture category must be estimated and excluded from
mixing of cost categories, the estimated unit pro- the metric. Development wells are believed to be by
duction cost will be higher compared to the standard far the largest and most important capitalized cost in
use of the term. C-NLOPBs production expenditure category, and
Using the C-NLOPB categorization, inflation- thus the focus of the adjustment.
adjusted production cost averaged $23.4/bbl from If production cost at each field was known,
2006 to 2018 and varied from $16.8/bbl at Hibernia, average development well cost could be estimated,
to about $36/bbl at Terra Nova and White Rose/ and vice versa, if development cost was known,
North/Amethyst (Table 13; Fig. 33). Standard devi- average production cost could be estimated using
ation of production cost during this time was $9.6/ the average well cost relationship:
bbl. Composite averages are smaller, from $15.8 at Production expenditure ð$Þ Operating cost ð$=bblÞ Production ðbblÞ
Hibernia, $27.0 at Terra Nova, and $34.2/bbl at :
Number of development wells
White Rose/North/Amethyst. Production cost at
Terra Nova and White Rose is more than twice as In Table 14, a theoretical relationship between
large as Hibernia reflecting the primary difference life cycle operating cost and average well cost using
between GBS and FPSO developments. Differences this relation is depicted. Enter the column at the left
in operations personnel, maintenance, and chemical at the assumed average production cost and read off
needs to support subsea wells are greater than dry the row entry for the average development well cost
tree wells. for the field. For example, at Hibernia, if average life
A better estimate of Newfoundland production cycle production cost is $8/bbl, then average devel-
cost requires that the capitalized items in production opment cost is estimated at $64 million/well. Simi-
expenditures be estimated24 and excluded from the larly, if average production cost was $18/bbl at Terra
metric. Nova, then average development well cost would be
$119 million. The different sensitivities at the three
24
fields are the result of different field characteristics.
Some useful data may be inferred from development drilling If one enters the tableau from the right at the as-
activity and reported expenditures, but caution is needed in
interpretation. From 2006 to 2018, for example, there were
sumed average development well cost, life cycle
five years where no development wells were drilled at Terra production cost can be estimated continuing left-
Nova, and eight years where a total of 12 wells were drilled. Using ward. For example, if average development well cost
the zero-well years as a baseline and not performing any inflation- at Terra Nova is $70 million (Table 2), then average
adjustment, production cost for these years is computed as $15.4/ production cost would be estimated at about $21/
bbl. For drilling years, production cost is computed to be $29.6/
bbl.
bbl.
1282 Kaiser
Table 13. Average inflation adjusted production cost statistics offshore Newfoundland, 2006–2018. Source: Data from C-NLOPB
Production cost Hibernia Terra Nova White Rose/North Amethyst Total
Composite average ($/bbl) 15.8 27.0 34.2 21.6

Annual average ($/bbl) 16.8 36.4 35.3 (49.4)a 23.4
Standard deviation ($/bbl) 8.9 24.5 19.7 (54.3)a 9.6
a
North Amethyst production expenditures in 2018 excluded in evaluation. When included in the sample, the value in the parenthesis is
obtained
exploration and development. Developments in ex-

120
treme environments can be commercialized and
100 performed in an environmentally responsible man-
Producon Cost ($/bbl)
80
ner but require careful oversight by regulators, large
investments by operators, and long development
60
cycles to bring to fruition. Newfoundland waters are
40 one of the most challenging offshore environments
20
worldwide and require investors to take large eco-
nomic risks in development, but Canadas transpar-
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
ent and stable political regime, rule of law, and
Hibernia Terra Nova White Rose/North Amethyst Total
favorable fiscal terms balance the equation and have
encouraged investment in the region.
Figure 33. Production cost at Newfoundlands offshore
From 1966 to 2019, operators have spent a total
developments include capital spending on development
wells drilled after first production. White Rose/North of $84 billion Canadian dollars in exploration,
Amethyst production cost in 2018 is not reported since the development, and production activities offshore
statistic falls significantly outside of the graph bounds. Newfoundland and Labrador, approximately $15
Source: C-NLOPB. billion in exploration, $36 billion in development,
and $33 billion in production. Four major projects
Adjusted Production Cost have been developed offshore Newfoundland, and
since production started in 1997, operators have
At Hibernia and Hebron, assuming $40 million produced about 2 billion barrels of an estimated 3.3
per development well, development well expendi- billion barrels recoverable oil.
tures of $6.2 billion were allocated to production From 1998 to 2018, exploration and delineation
cost. At Terra Nova and White Rose/North Ame- drilling averaged $90.9 million per well, and devel-
thyst, assuming $60 million per development well opment wells drilled from MODUs were nearly
leads to $3.2 billion allocated to production. In total, identical at $91.1 million per well. Both exploration
of the reported $25.8 billion production expendi- and development wells were drilled from MODUs,
tures from 1997, $9.4 billion is estimated to arise so perhaps the similarity in results are not that sur-
from development drilling, leading to $16.4 billion prising. The average injector well cost slightly less at
adjusted cost, or an adjusted cost of $8.5 per barrel $68.8 million per well. On a per meter basis, explo-
produced. If development wells cost on average ration and delineation drilling cost $26,500 per me-
twice as much as assumed, $18.8 billion would arise ter compared to $15,900 to $24,000 per meter for
from development drilling, and adjusted production development wells.
cost would be $7 billion, or about $3.7 per barrel. On a regional basis, development expenditures
normalized by cumulative production was $32.5/bbl
since the start of production and is expected to fall
CONCLUSIONS to $22/bbl when recoverable reserves have been
extracted. Average inflation-adjusted production
Offshore Newfoundland is characterized by cost from 2006 to 2018 was estimated at $23.4/bbl
severe storm and sea conditions, including the and ranged from $16.8/bbl at Hibernia to about $35/
presence of icebergs, which challenge all aspects of bbl at Terra Nova and White Rose.
Table 14. Theoretical relationship between life cycle operating cost and development well cost offshore Newfoundland
Operating cost ($/bbl) Development well cost ($million)
Hibernia Terra Nova White Rose/North Amethyst
4 107 411 218

6 86 370 202
8 64 328 185
10 43 286 168
12 22 244 152
14 203 135
16 160 119
18 119 102
20 77 86
22 55 69
24 53
26 36
28 19
30
APPENDIX A: ICEBERG ALLEY Icebergs are calved off as glaciers discharge into
AND MANAGEMENT STRATEGIES the sea, and as they melt, they assume dramatic shapes
OFFSHORE NEWFOUNDLAND with pinnacles and saddles formed by melting and wind
action. Most calving occurs during the summer months
An iceberg is a body of floating ice that has when temperatures are highest, and icebergs usually
broken away from a glacier and thus distinct from take between one and three years to reach New-
sea ice which is formed in the ocean. When water foundland waters in an area known as Iceberg Alley.
freezes, the molecules form hexagonal structures About 10,000 or so icebergs are calved off glaciers in
which form stacks of crystals with a lot of empty the Arctic each year, most along the western coast of
space, allowing ice to float (Olovsson 2018). When Greenland, but these levels are expected to increase
sea ice forms, most of its salt content is ejected, and with climate change (Truillo and Thurman 2014).
so sea ice is mostly freshwater. Multi-year sea ice is Ocean currents driven by strong winds carry the ice-
usually less saline than first year sea ice and is usu- bergs south along the east coast of Newfoundland and
ally suitable to melt and drink. as far south as Philadelphia, Pennsylvania (40° N).
Water has a very unusual property in its solid Once detected, icebergs are monitored and managed
state. The density of distilled water at 20 °C is before they pose a threat to operations in the region.
0.9982 g/cm3. As water cools down, the density in- About 85% of icebergs crossing the Grand
creases and reaches a peak at 4 °C, but then upon Banks originate from the tidewater glaciers of West
further cooling, the density declines again until it Greenland, with the remainder calving from East
freezes at 0 °C. Ice has a density of 0.915 g/cm3, Greenland glaciers, Baffin Bay and Ellesmere Is-
significantly less dense than water whereas for al- lands. About 90% of the mass of an iceberg25 lies
most all other substances their solid form is denser
and thus sinks in their liquid state. 25
Seawater is slightly more dense than freshwater This is seen as follows. For an iceberg floating in water, the
pressure below the iceberg must be equal to the pressure in the
because of the dissolved salts it contains. The salinity water column at the same horizontal level to be in equilibrium
of seawater is typically 35 parts per thousand ppt (Afanasyev 2018). If hi is the total height of the iceberg, qi the
(3.5 wt%) by mass, and at 20 °C its density is density of ice, qw the density of seawater, and h the depth below
1.0248 g/cm3. At 40 ppt and 20 °C, the density is the waterline, then equating pressures qighi = qwgh leads to the
1.0286 g/cm3. Seawater freezes at a temperature depth of the iceberg: h = qihi/qw. The density of ice is 0.915 g/cm3,
while the density of seawater depends upon salinity, pressure, and
depending on salinity level but usually starts around temperature conditions. Recall that more salt results in denser sea
1.8 °C. Since most salt is ejected during freezing, water and warmer temperatures make water less dense because of
it has a density like freshwater, 0.915 g/cm3, and expansion. In high latitude surface waters during summer, qw
floats on top of seawater. ranges from 1.026 to 1.028 g/cm3, leading to the conclusion that
about 90% of the iceberg is submerged.
1284 Kaiser
below water and, in shallow water depth (< 100 m),

has the potential of contacting the seabed and poses
an impact risk to subsea facilities (Fig. 34). Icebergs
with a draft less than water depth are a collision
hazard to surface structures, vessels, mooring lines,
and production risers. In deepwater areas, iceberg
scour of the seabed is not a concern because the
water depth will greatly exceed the deepest draft
iceberg.
The number and size of icebergs vary widely
from year to year. Sizes range from tens of tonnes to
several million tonnes, and the mean number of
icebergs that enter a 1° square ( 60 nm per side)
near the platforms on the Grand Banks ranges from
40 to 400 per year. Without active management, this
translates into about one iceberg impact per struc-
ture every 10 years! The paths of icebergs are usu-
ally very erratic driven by a combination of wind, Figure 34. Subsea equipment needs to be buried to avoid ice
keel. Source: C-CORE.
current, and wave drift force, and so even if an ice-
berg appears to sail by it may circle back and create
an impact threat. The drift speed of icebergs usually
ranges from 0.3 to 1 m/s. The two primary methods for deflection include
On Nansens famous North Polar Expedition26 towing and water cannon blasting. Towing is the
of 1893–1896, a curious observation on the move- most common practice with success rates reported as
ment of icebergs relative to wind direction led to a high as 85%. On medium-size icebergs, defined as
fundamental discovery by his crew mate and student having a 60–120 m waterline length, towing uses a
W. Ekman, which later became known as Ekman single towline or an iceberg net. For larger icebergs
transport. in higher seas, dual-vessel towing may be employed.
Nansen noticed that icebergs drifted in a For smaller icebergs (known as growlers or bergy
direction at an angle to the direction the wind was bits) and shorter distances, vessels equipped with
blowing. Ekman considered the problem in his thesis water cannons spray seawater at the base of the
and found that the average movement of the whole iceberg, which can break the iceberg or change its
water column is actually perpendicular to the wind direction. Prop wash refers to when a vessel backs
direction (90° to the right-hand side in the northern up close to an iceberg and the wash from the pro-
hemisphere), and the direction taken by an iceberg pellers creates a localized current, thrusting the berg
depends on how deep the iceberg extends below the along a different course.
surface. Shallow keels will move in the general Platform support vessels collect information on
direction of the wind; deep keels will move at a ocean current and move alongside the iceberg to
greater angle to the wind. measure its draft, shape, and mass (Fig. 35). Stability
Detection, classification, and tracking are the analysis is performed, since whenever icebergs cen-
primary components of ice management systems ter of gravity and buoyancy shift, they can roll over
(Randell et al. 2009). Once a threat has been iden- and create safety hazards for towing operations.
tified,27 active physical management is executed. Using mathematical modeling techniques, combined
with wind and wave forecasts and other physical and
environmental information, iceberg movements are
26
Nansens mission was to drift across the North Pole in the vessel predicted and those which may drift close to the
Fram frozen in ice (and moving with the ice), and although production area are identified. Icebergs that are
Nansen did not reach the North Pole, he did reach 82° N latitude
after a long and perilous journey.
identified to require intervention are approached
27
while they are 20 km or more away from the plat-
Detection tools include ice patrols of the US Coast Guard and
form.
Canadian Ice Service, marine radar, airborne radar, satellite-
based radar, shore-based surface wave radar, platform support For facilities that are designed to disconnect
vessels, and side-scan sonar. and relocate to avoid interaction with icebergs (e.g.,
FPSOs and MODUs), management zones are de- portions of the plot arise when there is no new
fined (Fig. 36). Zone size is dynamic and determined wellbore constructed, which will occur when trip-
by iceberg drift and T-time, the time required to ping,29 installing and cementing casing, coring,
suspend operations, secure the well, and shut in weather delays, etc. The well-on-paper depth–time
production. For operations to be safe, the T-time plot and AFE are based on the expected drilling
must be greater than the time for the iceberg to requirements and well casing program, and the
reach the facility. If the Alert Zone shrinks to the benches reflect the trips planned to change drill bits
size of the Exclusion Zone, the facility is down- and related construction activities.
manned and wells secured. Iceberg towing is carried Operations are expected to follow the curve,
out in the control zone to prevent icebergs from but in practice wind up ahead or behind schedule.
breaching28 the Alert Zone. Unplanned events (e.g., weather, ice events, equip-
ment failure) will cause deviation from the expected
curve, and sometimes significantly. If the changes
APPENDIX B: DEPTH VS. TIME are significant, one or more supplemental plots and
AND DEPTH VS. COST PLOTS AFEs may be required, and these are often plotted
on the original curve. Supplemental AFEs are usu-
Depth vs. time and depth vs. cost plots repre- ally required if the occurrence of an unplanned
sent a graphical summary of the time and cost of event increases cost by 10% or more of the planned
the drilling and completion process through the cost.
progression of the measured depth of the well. When the target is reached, the depth–time and
Depth–time plots are often used for drilling the cost–time plots bottom out and stay flat since no new
well, and completion operations may or may not be wellbore is being drilled, but both time and cost
included in the plot. It is usually not obvious what continue to increase and extend the lines along the
time and cost categories are included without a x-axis. Flat time along the bottom of the depth–time
review of accompanying documents (e.g., total well plot is usually longer than other steps down the stairs
cost in drilling operations will only include drilling since during this time the well is getting ready to be
cost). handed over to completions or completions opera-
Before a well can be drilled, engineers design tions are included in the plot. Completion activities
the well on paper and specify all the required may occur immediately after the well has been
parameters involved in the process, such as casing drilled or the well may be suspended and completed
dimensions and type, and drilling mud regime, for later. Both are common and the type of well and rig
every stage of the process to target depth (Mitchell schedule determine if separate or continuing oper-
and Miska 2011). An Authorization for Expenditure ations are performed. Not all the bottom flat time is
(AFE) is required before activities commence. The due to completion activities, but for many wells if
operator generates an expected (P50) depth–time completion activities are included in the plot, a sig-
plot, and a best-in-class plot may also be included. nificant portion of this bench will be due to com-
The depth–time plot appears as a downward pletion activities.
staircase as the well is drilled deeper and further When drilling out a section of a well, instability
away from its spud point. The measured depth is may occur and if cannot be brought under control,
plotted along the y-axis with increasing values going the section will be abandoned and plugged back, and
down the axis. Measured depth represents the a sidetrack will be drilled from higher up in the well,
amount of borehole drilled along the wellbore. Flat causing the depth–time and cost–time plots to depart
from its downward progression and abruptly rise to
28 the depth where the sidetrack kicks off before fol-
On March 29, 2017, an iceberg entered the 0.25 nautical mile
ice exclusion area of the SeaRose FPSO. There were 84 personnel
lowing the staircase pattern again. Any rise in the
and 340,000 barrels of crude oil onboard at the time. In plots indicates bypasses or sidetracks which may be
accordance with Huskys Ice Management Plan filed with C- planned or unplanned. Exploration wells often have
NLOPB, the SeaRose FPSO should have disconnected and sailed planned sidetracks to test different targets, but in
away from the threatening iceberg. That action was not taken, and
personnel were at one point instructed to muster and brace for
29
impact. Ultimately, the iceberg did not contact the SeaRose FPSO Inserting and removing drill pipe from a well to replace a drill
or subsea infrastructure, and there were no injuries, no environ- bit or malfunctioning equipment is referred to as tripping.
mental damage, and no damage to the facilities. Obviously, when drillers are tripping new hole is not being drilled.
1286 Kaiser
Figure 35. Iceberg profile and properties calculated from three-dimensional shape measurements. Source: Oceans Ltd.
development wells sidetracks are often performed GSF Grand Banks was released on March 2, 2007.
because of problems in drilling or accessing a pro- The well took about 84 days to drill and cost about
ductive reservoir (e.g., the reservoir may be ce- $35.5 million before the well was suspended and
mented and a new horizon has to be found). completed later (Fig. 38). Well completion was fin-
ished on May 8, 2007, at a cost of $11.9 million.
Example White Rose E-18 7 Water Injector Well.
The time vs. depth curve for Husky Oils White Rose Example Terra Nova L-98 9 Producer Well.
E-18 7 horizontal water injector well is depicted in Petro-Canadas Terra Nova L-98 9 well was spud on
Figure 37. The well was spud on December 10, 2006, March 4, 2004, reached total depth of 3740 m on
reached total depth on February 12, 2007, and the April 8, and was completed on April 29 at a total
Barents Sea) and environmentally sensitive regions

(e.g., Garden Banks in the US Gulf of Mexico), no
discharge rules apply. The wide variation in the
concentration and type of constituents sometimes
make produced water challenging to treat and dis-
charge.
The physical and chemical properties of pro-
duced water depend upon the location of the field,
the geologic formation, and the type of hydrocarbon
produced (Veil and Clark 2011). The major con-
stituents of concern are salt content (expressed as
salinity, conductivity, or total dissolved solids), oil
and grease (organic compounds captured through an
n-hexane extraction procedure), inorganic and or-
ganic compounds introduced as chemical additives
to improve drilling and production operations, and
naturally occurring radioactive material.
Changes in produced water due to pressure and
Figure 36. Schematic of ice management zones and T-time temperature changes from production can impact
illustration. Source: C-NLOPB, C-CORE. precipitation of scales and corrosion which may lead
to leaks and costly repairs if not inhibited and
monitored. Inhibition of most scales is through
cost of $33.9 million (Fig. 39). The AFE budget is application of organic compounds which act to poi-
shown in red with the actual drilling cost shown in son (prevent) the growth sites of the crystals. Cor-
blue. Completion cost was a small part of the wells rosion mitigation typically takes investment in
total cost. corrosion-resistant alloys and/or a chemical corro-
sion–inhibition/monitoring program.
APPENDIX C: OIL PRODUCTION

FACILITY REQUIREMENTS Water Injection
The main function of an oil production facility Water may be injected into oil reservoirs to
is to stabilize the produced crude by separating the supplement oil recovery, and in each of the pro-
water and gas from the oil streams, the oil and water ducing fields offshore Newfoundland, water is in-
from the gas streams, and the oil and gas from the jected into one or more formations. Water injection
water streams, and then treating each output to is commonly used in reservoirs with aquifer support
satisfy transport and injection specifications, and to improve oil recovery and to maintain reservoir
offshore disposal requirements. For example, crude pressure to avoid compaction. Seawater will gener-
for shuttle transport is often required to meet the ally require treatment and the type of treatment and
specifications for vapor pressure of 75.8 kPa at 50 C cost depends on the source and issues identified. If
and BS&W < 0.5 vol%. operators inject water into reservoirs to maintain
pressure, they typically use seawater with some
chemicals since this is the lowest cost option. In
Produced Water some cases, subsurface water may be processed if
seawater causes injection problems. To inject pro-
Water that is produced with petroleum is reduced water,30 suspended solids and oil must be
ferred to as produced water. Most offshore plat-
forms dispose of produced water directly into the 30
There are also other risks involved. Souring potential is usually
ocean but must meet stringent regulations on the much greater than with injecting sea water, fracture containment
entrained and dissolved oil and other chemicals in may be compromised, and scaling potential is increased. A
the produced water. In Arctic regions (Beaufort and dedicated produced water disposal reservoir may not be available
or in the size required for water volumes.
1288 Kaiser
Figure 37. Water injector well E-18 7 in the White Rose Ben Nevis/Avalon formation (red curve) took 84 days before the well was
suspended for completion. Source: Husky Oil.
tered and injected into one or more oil zones of

specially drilled water injection wells. The volume of
injected seawater is usually about the same quantity
as the volume of crude and produced water ex-
tracted to match voidance replacement.
Figure 38. Water injector well E-18 7 in the White Rose Ben
Gas Injection
Nevis/Avalon formation cost about $35.5 million before
handed over to completions. Source: Husky Oil. Gas can be injected into reservoirs to supple-
ment recovery by maintaining reservoir pressure or
removed to an appropriate degree to avoid plugging as a means of disposing of gas which cannot be flared
and fouling the reservoir, and this is usually only or used. Surplus gas in each of the Grand Banks
pursued if produced water disposal is prohibited. fields is compressed and reinjected back into reser-
The operational requirements for seawater voirs. Generally, there is no need to control hydro-
injection generally require filtration, deoxygenation, carbon dew point as in export gas since injected gas
and corrosion control. The details of the treatment after compression will get hotter not cooler, but it
steps are specific to each project. For example, some may be attractive to remove heavy hydrocarbons for
projects may require injected water to be filtered to economic reasons. Dehydration is required to avoid
1 lm, while other systems may require 10 lm. water dropout and corrosion problems. A topsides
Deoxygenation in some systems may be achieved by dehydration unit dries the produced gas to a water
chemical addition; other systems may require gas content of about 1 lb/MMcf to eliminate the poten-
stripping and chemical treatment. Each process will tial for hydrate formation. In water injection regions,
have its own capital and operating cost requirement. gas flood is balanced with water volumes for opti-
Seawater that has been filtered, deaerated, and mum pressure management.
treated to control oxygen levels and bacteria is me-
Canadian Environmental Assessment Agency. (2020a). Decision

statement issued under Section 54 of the Canadian Envi-
ronmental Assessment Act, 2012 to Equinor Canada Ltd, for
the Flemish Pass exploration drilling project. Retrieved
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nts/p80129/129198E.pdf.
Canadian Environmental Assessment Agency. (2020b). Impact
Assessment Agency of Canada. 2020. BHP Canada, Central
Ridge and West Flemish Pass exploration drilling pro-
jects—public comments invited. Sep 30. Retrieved November
11, 2020 from https://www.canada.ca/en/impact-assessment-a
gency/news/2020/09/bhp-canada-central-ridge-and-west-flemi
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Technological advances to assess, manage and reduce ice risk

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Natural Resources Research, Vol. 30, No.

2, April 2021 (Ó 2021)

A Review of Exploration, Development, and Production

Received 13 July 2020; accepted 13 November 2020

INTRODUCTION unforgiving1 environment of the Northwest Atlantic

much of the hydrocarbons in the North Atlantic

sheet ice, but they require a large reserves base to

Figure 4. Exploration, development, and production 6

Canadas EEZ covers the majority of the con- EXPLORATION DRILLING

1600 18 borehole determines the volume of rock that must

70000 Suncor Energy Inc. is used in development (Fig. 9).

are estimated at 707 MMbbl (112 million m3).

Figure 8. Average inflation-adjusted exploration and

Drilling and Completion

development drilling occurring before and after Development Well Cost

completed or may be sidetracked later, or abandoned, depending

Hibernia Terra Nova White Rose/North Amethyst Hebron

First production 1997 2002 2005/2010/2022b 2017

and $15,923/m; White Rose wells cost $79.4 million

40000 For Terra Nova production wells, the average

resented 25% total well cost. The most

Measured Depth (m)

Figure 12. Relationship between amount of borehole drilled and

Production peaked in 2007 at 134 million barrels

Terra Novac White Rosec North Amethystc

10 Gas disposition and water injection totals per

5 replacement in aquifer drive reservoirs, and normal

Field Reservoir First Oil Gas Water

Hibernia Hibernia 1997 1034 1861 598

160 Petroleum reserves offshore Newfoundland are

50 St. Johns, Newfoundland (Canadian Environmental

Production Unit Hibernia Terra Nova White Rose/North Amethyst Total

Oil MMbbl 1067 406 236/51 1760

DEVELOPMENT TRADE-OFFS tion), and for complex completions cost can be as

directional and extended reach wells. Dry tree wells

tree wells drilled and completed from a platform rig

Capacity Hibernia Terra Nova White Rose Hebron

Oil (Mbpd) 230 150 140 150

The Hibernia reservoir is highly faulted and

Figure 26. Terra Nova major fault blocks. Source: Suncor.

Figure 27. Terra Nova turret general arrangement. Source: Suncor.

White Rose duction wells in the South Avalon reservoir and 11

before the decision to proceed was made in 2012

Unit development cost provides a rough indi-

probably the most common method combines esti- Spending Plans

Hibernia Terra Nova White Roseb Hebronc

Hibernia Terra Nova White Rose Hebron

CAPEX ($billion) 8.6 3.7 3.1 9.8

et al. 2001). Some benefits are required by local laws 7000

duction and influence many other cost components 0

such as personnel logistics and catering.

Figure 31. Total production expense and operations person-

Person-Hours and Head Counts vs. Production

1200 For producing fields, about 40 to 50 percent of total

3500 Labor Contribution to Production Expenditures

2500 Using 2020 workforce levels, and assuming

Figure 32. Production expenditures in million dollars and

Year Production Pre-production ($million) Post-prod. Total Operating

(1000 m3) Admin. Drilling Facilities Subsea ($million) ($million) ($million)