ExxonMobil seeks rig to drill in Flemish Pass, sparking new hope for offshore frontier

Oil giant ExxonMobil is on the hunt for a harsh-environment drill rig to carry out anexploration program in the Flemish Pass next year.

The rig hunt wasone of two expressions of interestissued in late Decemberindicatinginterest in this frontier region in offshore Newfoundland and Labrador is still high, despite an exploration setback for Statoilin 2017.

• No oil: 2 exploration wells in Flemish Pass turn up empty

ExxonMobilis looking fora mobile offshore drilling unit to carry out operations in the summer of 2019 in exploration licence area 1135.

The 266,000-hectare parcel is located southwest of discoveries by Statoil at Mizzen, Harpoon and Bay du Nord, roughly 500 kilometres east of St. John's.

• Record bid of $559M for Newfoundland oil exploration rights

ExxonMobiland its partners committed to spend a record $559 million in exploration on this licence when it acquired the parcel three years ago.

The Dec. 22 expression of interest (EOI) calls fora rig that can operate in water depths from 80 to 1,200 metres for an exploration drilling program of one, and possibly twoadditional wells starting in the summer of 2019.

But ExxonMobil is also leaving its options open, saying it may require the rig for other potential drilling projects until 2021.

Companies have until Jan. 12 to submit their expressions of interest.

A spokesperson for ExxonMobilCanada said itis in the process ofpre-qualifying companies that can supply a drill rig.

It has alsofiled an environmental impact statement with the Canadian Environmental Assessment Agency.

'It sends a message to the supply community'

The news is being welcomed bythe industry, knowing what it means for job creation and economic spinoffs, and in the longer term,potentially a fifth producing oil field in the offshore.

"There is renewed interest in the Flemish Pass area," said veteran oil industry consultant Rob Strong.

You've got to find it before you can produce it. And obviously they're looking for it.- Rob Strong, consultant

ExxonMobilhas a 40 per cent interest in the highly prospective licence area 1135, with StatoilCanada Ltd., and Suncor Energy Inc., each holding 30 per cent stakes in the licence.

The EOIfollows a disappointing exploration effortby Statoilin the Bay du Nord area, with a two-well drilling program showing that the amount of recoverable oil was in the lower range of previous estimates, or roughly 300 million barrels.

But there's no sign that companies are about to abandon the Flemish Pass Basin, despite its high costs, deep water and distance from land.

With Brent crude prices nearing $70 US, the stars are starting to line up, said Strong.

"I wouldn't hold my breath for production in the Flemish Pass. But you've got to find it before you can produce it. And obviously they're looking for it," he said.

• Dozens of wells, billions in spending? Deepwater potential in offshore N.L. hard to predict

Meanwhile, Chevron has also issued an EOIfor exploration activities inlicence area 1138. The work includes a seabed coring study for hydrocarbon detection that could be completed by this summer.

Strong said this is the type of work carried out in anticipation of exploration drilling.

"It does send a message to the supply community that there is a lot of interest in the Flemish Pass," Strong said.