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Balancing act: Where Eastern Canada's resource potential meets frontier risk
Recent deepwater setbacks can be offset by both frontiers and proven areas
Offshore Eastern Canada remains a region of profound geological potential, characterized by large, under-explored sedimentary basins that could hold billions of barrels of oil and gas. Decades of production from the proven Jeanne d’Arc Basin have established a robust petroleum system, yet significant exploration upside remains in deepwater frontier areas such as the Orphan Basin and Flemish Pass. Yet, recent drilling campaigns targeting these frontier areas have faced mixed commercial results, leading to a critical industry reassessment of risk versus reward. Consequently, the lack of immediate commercial discoveries has intensified the focus on the region’s proven acreage. Aging fields in Eastern Canada, where production is set to decline significantly from 2025 onward, underscore the need for successful projects, ideally large-scale deepwater developments. This looming decline highlights the urgency to offset projected output drops.
Despite the region’s geological potential, recent exploration efforts have yielded mixed results, underscoring the inherent risks of frontier exploration. These mixed results have intensified industry focus on Eastern Canada’s significant resource base, which spans the proven Jeanne d’Arc system to vast, under-explored frontier acreage.
Offshore Eastern Canada is distinguished by several large and geologically promising sedimentary basins, including the proven Jeanne d’Arc Basin, the active deepwater Flemish Pass and Orphan Basin and the frontier Labrador Sea basins (Hopedale, Hawke and Chidley). Each of these large deepwater basins are characterized by significant thicknesses of sedimentary fill, ranging to over 12 kilometers, overlying a relatively thin continental crust.
The Jeanne d’Arc Basin is a large asymmetric half-graben, where the primary high-quality source rock is the Kimmeridgian (Late Jurassic) Egret Member of the Rankin Formation, a prolific interval that is well understood. This source rock is correlative with similar hydrocarbon-generating formations in conjugate basins offshore Iberia and the Porcupine Basin in Western Europe and Morocco, providing valuable insight for testing new play concepts. The reservoirs often consist of coarse-grained regionally persistent marine sandstones in turbidite sequences from the Late Jurassic through the Early Cretaceous.
Beyond the Grand Banks, the Labrador Sea holds substantial future resource potential. The Hopedale Basin, the inboard slope of the Mesozoic rift between Labrador and Greenland, contains a gas-rich petroleum system, with an early exploration cycle proving approximately 4.89 trillion cubic feet (tcf) of recoverable gas volumes in Early Cretaceous sandstone reservoirs. Farther out, the deepwater Hawke and Chidley Basins are highly prospective, with gas chimneys and amplitude response in seismic data indicating a working hydrocarbon system.
We estimate that the offshore area of Newfoundland and Labrador has a resource potential of over 3.6 billion barrels of oil equivalent (boe). This acreage is substantial, with the area available for offshore exploration approximately 2.5 times the size of the North Sea, but only about 8% is currently under license.
This resource potential, despite the recent exploration setbacks, underscores the long-term strategic value of the region. However, the existing producing fields in Eastern Canada are aging, and production is projected to decline significantly from 2025 onward. This looming decline highlights the urgent need for successful new projects, particularly large-scale deepwater developments like the delayed Bay du Nord project, to come online to offset that and sustain output. Given the pressure on production, the focus is increasingly shifting back to the proven petroleum system of the Jeanne d’Arc Basin, where fields like Hibernia, Hebron and White Rose have a long history of production, offering lower de-risked opportunities.
In response to the mixed results in frontier areas and the need to balance risk, the Canada-Newfoundland and Labrador Offshore Energy Regulator (C-NLOER) launched a dual-pronged approach to encourage exploration risk management by balancing investment in undrilled, high-potential areas with a renewed focus on established, infrastructure-rich petroleum systems.
The C-NLOER announced the 2025 Call for Bids for Exploration Licenses across Eastern Newfoundland and Labrador South (36 parcels) on 22 May 2025, with a deadline set for 5 November 2025. No bids were received in response to either the Eastern Newfoundland or Labrador South Calls for bids.
The C-NLOER also issued a Call for Nominations for exploration parcels in the Jeanne d’Arc Basin on 29 August 2025. The deadline for this nomination period has also passed.
Despite the lack of bids in the 2025 Call for Bids, the immense geological endowment remains. The C-NLOER has stated that it will review its land tenure system to identify opportunities to enhance competitiveness. We will also be watching this space for updates on the potential bid round in the Jeanne d’Arc Basin for 2026.
Thomas Liles
Senior Vice President, Oil & Gas Research
matthew.bernstein@rystadenergy.com
Roxy Bush
Vice President, Client Services
matthew.bernstein@rystadenergy.com