* Statoil find opens up new basin for offshore Canada
* Oil majors Chevron and Shell also exploring new fields
* Scarcity of specialised rigs could hamper progress
By Nia Williams
CALGARY, Alberta, Sept 27 (Reuters) - Statoil's announcement this week of a major oil find off Canada's Atlanticcoast offers a refreshing reminder that new technology and highprices are helping uncover new oil supplies far beyond U.S.shale and the Alberta oil sands.
Statoil says its discovery in the deep-sea Bay du Nord maycontain up to 600 million barrels of recoverable oil, making itthe third-largest find in Atlantic Canada and rejuvenating hopefor an offshore region that was forecast to be in decline forthe next several decades.
Situated in an area known as the Flemish Pass basin, 500kilometres (300 miles) off the coast of Newfoundland andLabrador, the discovery opens up a new frontier, one that oilmajors Chevron and Royal Dutch Shell are alsopoised to probe.
"For that region it's certainly a significant find. Openingup a new area really lays the path down for growth in otherparts of Newfoundland," said Hugh Hopewell, senior analyst atWood Mackenzie.
While traditional drilling ventures have been overshadowedin recent years by the North American shale revolution and thebooming Alberta oil sands, new frontiers like the Flemish Passare adding to a growing consensus that the world is still flushwith oil, even in areas long thought to be past their peak.
Statoil's nearby Mizzen find may contain up to 200 millionbarrels, and the Harpoon discovery, announced in January, is yetto be evaluated. The finds are modest compared to the multiplebillions of barrels of oil now accessible thanks to horizontaldrilling, hydraulic fracturing and oil sands development, butbreak the prevailing trend.
Canada's existing three offshore fields -- clustered in theJeanne d'Arc basin some 150 km to the southwest of the FlemishPass basin -- pumped just under 200,000 barrels per day in 2012,down from around 370,000 bpd at their peak in 2007.
"When a discovery of this size is established, it's mostlikely there will be others. Players in the industry who had theregion on a back burner will start looking at it more seriouslynow," said Fadel Gheit, oil analyst at Oppenheimer & Co.
In its latest forecast the Canadian Association of PetroleumProducers (CAPP) had expected eastern Canadian production tofall to 90,000 bpd by 2030, after reaching 250,000 bpd in 2025.
In the short-term, output will be aided by the 2017 start-upof ExxonMobil Corp's Hebron field.
NEXT UP
Just how much oil is in the region will not be clear foryears. Statoil said it may not be able to return to the regionto drill more wells until 2015 because of rig availability; asrival drillers move in, it will be harder to get hold of thelabour and winterized rigs essential to operate in the NorthAtlantic.
"A discovery like this, which is the biggest in the worldsince 2010, will raise some attention. We are a little bit aheadof the game but expect increased competition," said GeirRichardson, vice president of Statoil Canada Exploration.
The state-owned Norwegian company is developing the field ina joint venture with Canadian partner Husky Energy Inc,which owns 35 percent of the field.
U.S. oil based Chevron is already drilling its thirdexploration well in the Orphan basin, roughly 50 km northeast ofthe Flemish Pass, although a company spokesman said Chevronplans to keep the results confidential.
Royal Dutch Shell, meanwhile, spent has C$970 ($940) millionacquiring exploration rights on four parcels of land off thesouthwest shore of the province of Nova Scotia.
The company shot three-dimensional azimuth seismic in thearea over the summer, the first time such technology had beenused in Canada, a Shell spokesman said.
Newfoundland and Labrador's Department of Natural Resourcessaid geoscience data indicates a further 6 billion barrels ofpotential oil reserves remain undiscovered, in addition to the 3billion barrels already found in the province's waters, whilethe government of Nova Scotia said it has 8 billion barrels ofoil potential offshore. Typically oil fields are only able topump a third or less of total reserves.
While that may appear paltry to Alberta's vast oil sands,where output is expected to hit 5.2 million barrels a day by2030, it also offers some advantages: Offshore production neatlysidesteps the issue of congested pipelines in landlocked Albertathat have driven down the price of oil sands crude, and provideseasy access to markets in Europe and India.
"It's an escape hatch for companies producing in Canada,"Gheit added.
ICEBERG ALLEY
It isn't without challenges, however, primarily rigavailability and harsh environmental conditions.
The Jeanne d'Arc basin is in "Iceberg Alley", an areadescribed on Statoil's website as being characterized bysub-zero temperatures, severe sea states, intensive seasonalfog, pack ice and enormous icebergs.
Although the Flemish Pass find is outside Iceberg Alley,conditions are still brutal, especially in winter.
Paul Barnes, Atlantic Canada manager for CAPP, said thereare less than 10 rigs in the world suitable to operate in theseas off eastern Canada, and they generally operate undermulti-year contracts which makes it difficult to book themquickly.
"One of the big challenges for the region is that it's inthe flow of icebergs that come down from the north so if youhave a drilling platform that needs to be accounted for," saidsenior Wood Mackenzie analyst Hugh Hopewell.
"Once you have a production facility in place you need tohave some kind of system to deal with icebergs."
For projects already operating in Iceberg Alley, likeExxonMobil's Hibernia, that system includes using support shipsto "lasso" approaching icebergs with cables and towing them awayfrom the platform.
