The latest round of bids for exploration rights in the Newfoundland offshore has resulted in a dramatic drop in work commitments from the industry compared to recent years.
According to the Canada-Newfoundland and Labrador Offshore Petroleum Board, there were three parcels totalling 317,407 hectares up for grabs this year.
Two of the parcels generated no interest at all.
The other one saw a winning bid of just over $15 million in work commitments from Husky Oil Operations Limited (50 per cent) and BP Canada Energy Group ULC (50 per cent).
All three parcels are the Jeanne d'Arc region, about 340 kilometres east-southeast of St. John's, which is home to current producing fields.
Sharp drop in financial commitments
There were fewer parcels of land up for grabs this year — and a lot less interest expressed by the industry.
From 2014 through 2016, exploration commitments in the Newfoundland offshore ranged from a then-record $559 million to a new high of more than double that — $1.2 billion.
- Oil companies promise $758M in work for right to explore off Newfoundland
- Companies pledge to spend $1.2B on N.L. offshore exploration
- Record bid of $559M for Newfoundland oil exploration rights
Those past numbers compare to just $15 million committed on one parcel this year.
According to the C-NLOPB, there is only one criterion for picking a winning bid — the total amount the bidder commits to spend on exploration of the parcel in the first period of a nine-year licence.
The minimum acceptable bid for each parcel is $10 million in work commitments.