With energy companies lining up to explore Nova Scotia's offshore offerings, this week the provincial government will release new evidence that supports the claim that oil — not just natural gas — awaits investors.
In June, the Nova Scotia government began a two-week research expedition in the Shelburne Basin off the southeastern coast. The goal was to extract core samples from the ocean floor, roughly 2,600 metres beneath the surface.
At least two of those core samples show "good evidence of petrogenic hydrocarbons," according to the government's analysis.
"This supports the suggestion that we happen to be in an area that's oil dominant as opposed to gas dominant," said Sandy MacMullin, head of the provincial Department of Energy's petroleum branch.
He said an earlier seismic analysis — called the Play Fairway Analysis — suggested there is currently 121 trillion cubic feet of natural gas and 8 billion barrels of oil off Nova Scotia's coast.
These latest core samples offer more data to support the claim that oil exists offshore.
"Oil tends to attract a premium," said MacMullin. "There's more things that you can do with oil."
'Companies are looking for oil'
Shell Canada is preparing to drill exploratory wells off Nova Scotia's coast. In 2012, the company made it clear it was looking for oil, not natural gas. Shell said extracting gas would not be a profitable venture. Since that time, the value of natural gas has further dropped.
That price drop, coupled with the falling price of oil, has made it a difficult year for energy companies.
"What we're seeing is a pretty challenging environment," said Lance Matlock, a partner with Ernst & Young LLP.
Along with Shell Canada, a consortium led by BP has also committed to exploring Nova Scotia's offshore. However, a BP official warned the company may soon start cancelling projects in various parts of the world.
"Many of them will fall off the table," said Robert O'Connor, the Canada Exploration Manager for BP. "We will need to do fewer things. We will do things that have the best opportunity to succeed."
The government hopes the latest core samples stir renewed interest in Nova Scotia's offshore.
"If Shell ends up finding gas, it'll depend on how much they find," said MacMullin.
"But companies are looking for oil."