Click chart for enlargement

 

 

Photo: Terra Nova Project. 
The Bill Shoemaker drilled three 
delineation wells on White Rose in 
1999. Husky estimates that White 
Rose could contain up to 
2 trillion cubic feet of natural gas.

 

World consumption of natural gas 
has risen by 2.5% annually since 1980.

 

U.S. consumption of Canadian natural 
gas is growing. Canadian exports of 
natural gas to the U.S. have grown 
by 9.8% annually since 1990.

 

Natural Resources Canada; 
Economics and Statistics Branch, 
Department of Finance

The start-up of Sable Island late last 
year connected the Maritimes to the 
North American gas pipeline grid.

NATURAL GAS - THE NEW FRONTIER

The Province has a rich natural gas endowment. Stakeholders have been eyeing this resource with a view to tapping into its significant potential.

Natural Gas Consumption on the Increase
Natural gas consumption is growing worldwide due to economic growth and environmental pressures for cleaner energy sources than oil or coal. While an estimated 70% of the world�s natural gas reserves are located in the NIS (New Independent States of the former Soviet Union) and the Middle East, the major markets are in the industrialized countries of North America and Western Europe. Developing these, and other, stranded gas reserves in a way that is environmentally sound and provides sufficient benefits to stakeholders is the challenge facing industry.

The Province�s Resource Endowment
Natural gas estimates for the Province place its endowment (discovered and potential) at over 50 trillion cubic feet, roughly 15% of Canada�s resources. According to the Canada-Newfoundland Offshore Petroleum Board, the Labrador Shelf and Jeanne d�Arc Basin contain 4.2 and 4.0 trillion cubic feet of discovered natural gas respectively. The Jeanne d�Arc Basin on the Grand Banks (which contains Hibernia, Terra Nova and White Rose) is regarded as the most likely candidate for offshore gas development under current technology. 

Development Options
The development of natural gas reserves on the Grand Banks will be another major step forward in expanding and diversifying the oil and gas industry in the Province. To achieve this, stakeholders must consider optimum gas production, processing and transportation options as well as market opportunities.

In a joint industry-government report prepared in 1998, three production system options for the Grand Banks were outlined. These options included fixed platform production; floating production system; and subsea production from satellite fields connected to a host platform. A fixed production system is currently used in oil production at Hibernia and a floating oil production system design will be used for Terra Nova.

In addition to the production system alternatives, several processing and transportation options are available to move offshore gas resources to market. The most common gas transportation option is by pipeline. Under this option, gas could be landed in the Province to meet its growing energy requirements and form a feedstock for further value added processing. Gas surplus to the Province�s needs could be exported by pipeline and fed into the North American pipeline grid. Other possibilities include transportation of compressed natural gas by  Additional options under consideration include conversion (either onshore or offshore) of gas to liquefied natural gas (LNG) or conversion of gas to other liquids such as methanol or synfuels. LNG would likely be shipped directly into international markets while other liquid products could be further processed in the Province or sold directly into other national or international markets.

While the Sable Island natural gas development posed different challenges than the Grand Banks, this project illustrates some of the options available in gas development. In the Sable project, gas is produced on a fixed steel jacket platform and transported via pipeline to Nova Scotia. Once landed, the gas and natural gas liquids are separated. Gas is transported through the Maritimes and into the U.S. through the North American pipeline grid while natural gas liquids are processed for further marketing into condensate, propane and butane.

Ongoing Research
Industry and government are conducting further research with a view to better understanding the potential resource base, markets, development options and project viability. The results from this research are expected to be released this summer.