Major deepwater drilling underway 500 km off Newfoundland

Energy giants ExxonMobil and Qatar Energy are drilling an exploratory well 500 kilometres east of Newfoundland, in waters about 30 times deeper than those at the province's existing oil projects.

If successful, the Persephone C-54 well in the Orphan basin could help confirm the presence of billions of barrels of oil.

Drillship Stena DrillMax and four supply vessels have been drilling in waters three kilometres deep since May 24, according to ExxonMobil spokesperson Shelley Sullivan.

The project, deemed a "high-impact well" by financial analysis heavyweight S&P Global, is costing ExxonMobil and Qater Energy at least $1 million a day, estimated longtime industry watcher Rob Strong.

"That's got to tell you something, if oil companies are prepared to spend that kind of money drilling," said Strong in an interview Thursday.

"Persephone is designated as one of the most high-prospect wells in the world. High-impact wells refer to oil and gas exploration and drilling projects that have the potential to significantly impact the overall reserves, production and economic value of a particular region or a company's portfolio."

Discovered in 2020 by OilCo, the Crown corporation responsible for developing the Newfoundland and Labrador oil industry, Persephone has since spurred major speculation. In May, industry magazine Upstream reported three billion barrels of oil could be potentially be located in the area where drilling is underway.

OilCo CEO Jim Keating, who declined an interview request from CBC/Radio-Canada, told Upstream at the time that Persephone, previously labelled Heart's Content, had "multibillion-barrel potential."

But Strong cautioned that despite early seismic work from OilCo, "you don't know until you drill it, and you have to drill several wells to determine the extent of the reservoir."

More exploration already planned for 2025

ExxonMobil, already the operator at the Hibernia and Hebron platforms, issued an expression of interest on June 26 seeking companies willing to complete more seismic work in the Orphan basin between May and September 2025.

"They want to go back even before the completion of Persephone," said Strong.

Several international organizations, such as the International Energy Agency, have argued for years that companies need to cease all new oil projects in order for the planet to avert climate catastrophe. Strong said many in the industry also believethe federal Liberal government has signalledthe Bay du Nord project could be the last offshore oil project released from environmental assessment by Ottawa.

And yet, ExxonMobil and Qatar Energy's exploration efforts show no sign of slowing.

"Why discover it if you're never going to get permission to produce it?" he said, noting the federal Conservative Party's more "liberal" approach to fossil fuel production. The Conservatives have promised to significantly boost oil production in the Newfoundland offshore industry.

$181M in exploration work promised

"Ultra-deep" wells such as Persephone aren't without precedent globally. However, the province's current offshore projects Hibernia, Hebron, Terra Nova and White Rose are all located in waters just 90 to 120 metres deep.

The Bay du Nord project, another potential deepwater floating, production, storage and offloading vessel put on hold by Equinor in order to reshape the project and reduce costs, would be located in water depths of about 1,200 metres.

ExxonMobil and Qatar Energy were granted a licence to conduct exploratory drilling in area 1169 by the Canada-Newfoundland and Labrador Petroleum Board in November 2022. The licence, which covers 2,700 square kilometres, hinges on the companies spending at least $181 million on exploration activities.

In May, Upstream reported the drilling currently underway would last about three months.

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