Newfoundland and Labrador’s Shale and Tight Resources

Newfoundland
and Labrador

Geography
Geology
Exploration and Production
Regulation
Public Research

Map of NL

A product of the Energy and Mines Ministers’ Conference

Newfoundland and Labrador’s Oil and Gas Resources

12.6 TRILLION CUBIC FEET
Marketable Natural Gas

3,900 MILLION BARRELS
Marketable Crude Oil

0 BILLION CUBIC FEET/DAY
Total Natural Gas Production (2013)
- 0 BILLION CUBIC FEET/DAY
  Shale/Tight Gas Production (2013)

0.2 MILLION BARRELS/DAY
Total Crude Oil Production (2013)
- 0 MILLION BARRELS/DAY
  Tight Oil Production (2013)

Source:

Resource estimates: Government of Newfoundland and Labrador
Production estimates: National Energy Board (may not align with provincial data due to differences in methodology)

Geography

In Newfoundland and Labrador, shale and tight resources are concentrated along the west coast of the island of Newfoundland. Western Newfoundland is geologically complex, and its evolution involved the opening and closing of the Late Precambrian to Early Paleozoic Iapetus Ocean.

Prior to the opening of the present day Atlantic Ocean during the Late Triassic, the Appalachian-Caledonian Orogen formed one continuous mountain chain that stretched from the Scandinavian Caledonides in the North through Scotland, Ireland, eastern Greenland and then over to the North American Appalachians.

The island of Newfoundland contains a well-exposed portion of the Appalachian-Caledonian fold belt and has been divided into four zones based on lithologic and tectonic characteristics. The four zones are the Avalon Zone, the Gander Zone, the Dunnage Zone, and the Humber Zone. The Humber Zone is the area with hydrocarbon potential in Newfoundland’s onshore area, and all shale and tight petroleum resources reside therein.

Geology

The primary shale source rock in western Newfoundland is the allochthonous, Cambro-Ordovicianaged Green Point Formation of the Cow Head Group. In outcrop, the Green Point shale is heavily fractured and these fractures crisscross the rock layers at various angles, potentially reducing the structural integrity of the formation. The fractures are likely enhancing hydrocarbon leakage and responsible for the abundant seeps and shows throughout the Anticosti Basin in western Newfoundland.

In addition to the Cow Head Group (Green Point shale), secondary source rock potential exists within the distal, laterally equivalent Northern Head Group and underlying early Cambrian Curling Group. Overlying foreland basin shales of the Table Cove and Black Cove formations may also represent significant source potential.

The Curling group and overlying Cow Head (proximal) and Northern Head (distal) groups represent deep water sedimentation along the passive margin of the Iapetus Ocean. The closure of Iapetus during the mid-Ordovician resulted in uplift and erosion of the platform, followed by margin collapse and foreland basin deposition. With final ocean closure, slope / rise sequences of the continental margin were telescoped and transported from the southeast towards the northwest, coming to rest on top of the Laurentian shelf margin.

Sampled shales of the Green Point formation include organic-rich, type I/II source intervals with Total Organic Carbon (TOC) content up to 10.4 percent and Hydrogen Indices (HI) up to 759. The Tmax values range from 434-443⁰C, indicating a thermal maturity below or within the oil window.

The Green Point formation in the Port au Port region is thicker than normal due to duplexing of allochthonous strata during emplacement.

Volumetric calculations from petrophysical data for the Green Point section encountered in the Shoal Point K-39, 2K-39, 3K-39 and Long Point M-16 wells on the Port au Port Peninsula suggest the following:

Up to 915-metre (TVD) intersected interval of Green Point Formation containing 333 metres of net pay (M-16);
Storage capacity of almost 380 million barrels of oil-in-place per section;
Over 593,000 barrels of oil-in-place per acre across this 915-metre (TVD) gross interval.

The Geological Survey of Canada (GSC) public Rock-Eval database includes 12 samples of Green Point Formation with the following characteristics: TOC up to 8.37 percent, averaging 5.86 percent; Tmax up to 444, averaging 440; S1 up to 1.73, averaging 1.32; S2 up to 62.06, averaging 34.83; S3 up to 0.53. The Utica shale of Quebec, New York and Pennsylvania appear to be depositional equivalents to the foreland basin shales in western Newfoundland.

Exploration and Production

Naturally occurring hydrocarbon seeps and shows have been observed along the coastline and inland waterways of western Newfoundland for the past two hundred years. The earliest reference, which dates back to 1812, was centred around Parson’s Pond on the Northern Peninsula. In this area and elsewhere throughout western Newfoundland, hydrocarbon occurrences manifest themselves as live and dead oil shows within various host rocks, as gaseous emissions from surface and subsurface fractures and as petroliferous odours released from freshly broken rock.

The historic exploration/drilling phase for western Newfoundland had its beginning with a well drilled by John Silver at Parson’s Pond in 1867 and culminated with the drilling of four shallow stratigraphic test holes by BHP Petroleum Limited at Port au Choix in 1991. It is estimated at least 64 wells were drilled in this timeframe, none of which were located using seismic data. Wells were spotted adjacent to surface seeps or along topographic irregularities. Over half the wells drilled encountered trace to minor amounts of oil and/or gas, and it is estimated 5,000 to 10,000 barrels of oil may have been produced, although no records exist to verify these numbers.

Since 1994, seismic has been the primary tool used for well selection, and this date serves to separate the historic and current exploration periods documented in this report. Forty onshore wells, characterized as exploration, delineation or stratigraphic test have been drilled from 1994 to 2015. Some of these failed to penetrate overburden or were abandoned prematurely due to drill-related problems. Most of the wells encountered hydrocarbons, but only the Port au Port #1 well and associated sidetracks situated on the Port au Port Peninsula achieved hydrocarbon production; production to date has been approximately 40,000 barrels oil with associated gas.

In the near offshore of western Newfoundland, the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) reports that nine onshore-to-offshore wells and one offshore well have been drilled in western Newfoundland since 1995.

The numerous hydrocarbon seeps and shows throughout western Newfoundland demonstrate the presence of at least two active petroleum systems and allude to the discovered and undiscovered potential of these systems. There is at least one proven, and maybe more, source rock units capable of generating hydrocarbons.

The provincial Department of Natural Resources through its internal review work, commissioned a jurisdictional review of Hydraulic Fracturing Best Practices and the preparation of Guidelines for Oil and Gas Operations involving hydraulic fracturing. These best practices and guidelines were intended to build upon existing regulations governing oil and natural gas industry activities in Newfoundland and Labrador. Their very specific purpose is to ensure that hydraulic fracturing operations, should they be allowed onshore in Newfoundland and Labrador, are conducted in a manner that maximizes safety, environmental protection, and resource conservation.

In November 2013, the Department of Natural Resources announced that any applications seeking approval for oil or gas exploration or development that involved hydraulic fracturing would not be accepted pending a jurisdictional review, a geological review, and an opportunity for public engagement.

In October 2014, the Minister of Natural Resources announced the appointment of an independent panel of five individuals to conduct a review of the socio-economic and environmental implications of hydraulic fracturing in western Newfoundland. The panel was provided with a terms of reference, as well as research completed during the provincial government’s internal review noted above.

At the end of the review, the panel will prepare a report and make recommendations on whether or not hydraulic fracturing should be undertaken in western Newfoundland. The final report will be made available to the public and is due within one year.

Regulation

Onshore

The Minister of Natural Resources has primary authority to regulate oil and gas activities under the Petroleum and Natural Gas Act and subordinate regulations. The granting of these approvals is based on the content of the detailed description of the activity as provided in the application for approval, and may also be based on the authority to prescribe terms and conditions necessary to ensure the protection of the public interest. This includes terms and conditions for approval of a development plan under the Petroleum Regulations, a drilling program or an authority to drill a well under the Petroleum Drilling Regulations or any other approval granted under this Act.

The Minister of Environment and Conservation has broad legislative authority to regulate and approve activities that may adversely affect the environment and that involve the use of water. The environmental legislation that is particularly relevant is as follows:

Newfoundland and Labrador’s Environmental Protection Act, which contains many provisions that are applicable to oil and natural gas industry activities and cover such topics as release of contaminants, water disposal, air quality and environmental assessments.
Newfoundland and Labrador’s Water Resources Act regulating water rights and protection of water within the province. Aspects such as water testing, water well drilling and licensing and permitting are also included in this Act.

Regulation of Exploration

The Petroleum and Natural Gas Actand subordinate regulations define how the rights to explore for and develop oil and gas properties on land may be obtained and maintained, how areas may be assigned for exploration, the scope with which government may regulate activity, and the various royalties that may be due. It includes: Petroleum Regulations, Petroleum Drilling Regulations, Oil Royalty Regulations, Royalty Regulations and Guidelines.

Regulation of Production

Oil and gas development cannot proceed without approvals including the requirement to submit a Development Plan, and the granting of these approvals includes the authority to prescribe terms and conditions necessary to ensure the protection of the public interest.

The key principle the provincial government would adopt in regulating hydraulic fracturing operations, should these activities proceed, is risk mitigation. This principle requires operators to control risks. To do this they must adopt a systematic approach to risk identification and apply the practices of quality engineering to the design of their systems and risk solutions. In short, they are required to develop the most effective techniques and approaches available in order to address the risks posed by their operations. By assessing risk at an early stage, and by planning operations with mitigation of risks at the forefront, the negative impact of hydraulic fracturing operations can be reduced to meet the “as low as reasonably practicable” standard.

Offshore

The Canada–Newfoundland and Labrador Atlantic Accord Implementation Newfoundland and Labrador Act and the federal mirror legislation sets out the mechanism for joint federal–provincial management of the Newfoundland offshore area through the Canada–Newfoundland and Labrador Offshore Petroleum Board (CNLOPB). The Act also defines the methods for obtaining exploration and production rights, the requirements for safety, resource conservation, and environmental protection, and the activities that may be regulated. Regulations that govern offshore oil and gas exploration are as follows:

Canada–Newfoundland and Labrador Oil and Gas Spills and Debris Liability Newfoundland Regulations;
Certificate of Fitness Newfoundland Regulations
Offshore Area Oil and Gas Operations Regulations;
Offshore Area Petroleum Geophysical Operations Newfoundland Regulations;
Offshore Area Registration Regulations;
Offshore Area Petroleum Diving Newfoundland and Labrador Regulations;
Offshore Petroleum Installations Newfoundland and Labrador Regulations;
Transitional Regulations; and,
Offshore Petroleum Drilling and Production Newfoundland and Labrador Regulations, 2009.