Statoil Says Canadian Oil Finds May Signal Moroccan Crude

Statoil ASA said oil discoveries off eastern Canada may signal potential crude finds off Morocco in northwest Africa because the regions could have similar geology.

Statoil’s latest Bay du Nord find in Canada’s Flemish Pass Basin may hold as much as 600 million barrels of recoverable oil, according to the company. That part of the North American coast used to be joined with Africa before the continents’ tectonic plates moved apart more than 100 million years ago.

“The analogue is probably more toward northwestern Africa, toward Morocco,” Tim Dodson, vice president of exploration at Stavanger, Norway-based Statoil, said in an interview in London on Nov. 27. “This is where potentially you could look.”

Some of the world’s biggest oil companies, including BP Plc and Chevron Corp., plan to expand operations off Morocco this decade, while the U.K.’s Cairn Energy Plc started a new well there in October. Across the Atlantic Ocean in Canada, Statoil and local partner Husky Energy Inc. made their first discovery at the Flemish Pass’s Mizzen prospect off Newfoundland in 2009.

“Maybe the Mizzen well told them something,” Dodson said of the other oil producers. “It’s pretty strange to me that they are taking positions in Morocco, but then they don’t want to join in Canada, where we have already proven the hydrocarbon system.”

‘Not Selling’

Statoil had sought more partners to share drilling costs prior to the Bay du Nord and Harpoon finds this year, according to Dodson. The company now plans to appraise the discoveries further before offering any stakes in the fields and deciding on their development.

“We have a lot of upside on the structure, which we’ve not assessed yet. This could get bigger,” he said. “We are not about to sell in Canada any time soon.”

A total of about 10 wells in Moroccan waters are planned through 2014, according to Citigroup Inc. Explorers have long operated onshore in the country, drilling 730 wells since 1919, while there are only 40 at sea, according to Oswald Clint, an analyst at Sanford C. Bernstein & Co. in London.

“Morocco and Nova Scotia were the same land, so they have very similar geology and the basin fill is similar,” Haddou Jabour, a manager at Morocco’s Office National des Hydrocarbures et des Mines, said in an interview in Cape Town. “We are at the eve of a very interesting cycle of exploration activity.”

‘Forgotten Basin’

The Statoil discoveries may also indicate possible oil resources in Porcupine Basin West off Ireland, Tudor, Pickering, Holt & Co. wrote in a September report. Providence Resources Plc, the Irish oil and gas explorer, in July said it had to plug and abandon the Dunquin North well in the area because the reservoir, which had oil shows, was water bearing.

Exxon Mobil Corp., Eni SpA, Repsol SA, Kosmos Energy Ltd. and other companies are searching for oil and gas in the basin.

Kosmos completed a 3D seismic survey of its license in the Porcupine Basin, Europa Oil & Gas Holdings Plc, a partner in the project, said Oct. 24.

“We are very excited about the Porcupine trough which is classically a forgotten basin,” Eric Haas, a vice president at Kosmos, said Nov. 19. “One of the things, we liked about the southern part of Porcupine was that there was a well, an old well drilled by BP, which actually penetrated very rich oil-prone” rocks, Paul Dailly, chief geologist at Kosmos, said the same day.

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