Vulcan Minerals is returning to scene of its Flat Bay No. 1 oil discovery to determine the size of that 12-year-old onshore find.
The St. John's-based company said recently it will drill one well 1,000 metres deep and up to five smaller holes to collect additional core samples of rock.
Vulcan's president and CEO, Pat Laracy, expects the estimated $4 million worth of work will begin by late summer or early fall.
In recent years, the company has focused on natural gas exploration. It has a pair of west coast gas discoveries and is waiting on equipment availability to further test them.
"We're not going to sit on hands while we're waiting," Mr. Laracy said.
"We're shifting our focus back there for one simple reason: oil is of more interest to the market right now than gas.
'The first thing we need to do is to define the scale of the oil pool."
World prices for Brent crude remain above US $100 per barrel, while the price of natural gas is low at about US $4.30 per million British thermal unit.
Exploration goals
Mr. Laracy said this year's exploration program has three goals – quantify the size of the oil pool, find natural fracturing in the rocks so the oil can be produced, and see if the oil can be found at deeper depths.
First on the to-do list is collecting the core samples. If the results are positive, Mr. Laracy said the company will follow up with a well about four kilometres from Flat Bay No. 1.
Last year, Vulcan re-entered that 1999 discovery well to collect more information on the reservoir.
It encountered more than 100 metres of a petroleum-bearing formation less than 286 metres below the surface of the ground.
"The oil pool thus far that we've discovered is tight," Mr. Laracy said.
"There's low porosity, permeability, which means you have to spend more time, energy and money to get it out of the ground."
The shallow oil is encouraging, but isn't necessarily a blessing.
"We have normal oil," Mr. Laracy said. "We're not seeing the flow we'd like because one of the challenges of Flat Bay is that - and now we're getting technical - it's so shallow that the reservoir temperature is not high enough so that the oil flows freely."
Mr. Laracy's hope is that oil can be found at deeper depths and in commercial quantities.
"There's no guarantees of anything.
"This is what exploration is all about. You come up with theories, models and you go test them."
Potash spinoff named
On the mining front, Vulcan has a name for its soon-to-be-spun-off potash company.
Red Moon Potash Inc. is named for the June 15 lunar eclipse seen only in the southern hemisphere that made the moon appear red.
The company was incorporated the same day.
"We wanted red because potash is red," said Mr. Laracy. "It's red, it's rare, it's something special."
It also continues the space theme that began with Vulcan, the TV home planet of a pointy-eared alien named Spock.
Mr. Laracy said Red Moon continues to work its way through regulatory approvals and the legal process of setting up a new, publicly traded company.
In May, Vulcan announced the spin-off company would focus exclusively on potash and salt exploration, starting with a west coast discovery made in 2002.
Potash is a crop fertilizer and rock salt is used for de-icing roads.
