Nfld. & Labrador

Chinese oil company gets go-ahead for exploration drilling in Flemish Pass Basin

The federal government has approved the proposal of a new offshore exploration drilling project set to begin in the Flemish Pass Basin — about 400 kilometres east of Newfoundland and Labrador. 

Approval is a positive development, says natural resources minister

The China National Offshore Oil Corporation has the green light from the federal government to explore the Flemish Pass Basin for oil. (Claro Cortes/Reuters)

The federal government has approved the proposal of a new offshore exploration drilling project set to begin in the Flemish Pass Basin — about 400 kilometres east of Newfoundland and Labrador. 

"The decision was made following a thorough and science-based environmental assessment process concluding that the project is not likely to cause significant adverse environmental effects when mitigation measures are taken into account," the federal government said in a news release. 

Federal Environment and Climate Change Minister Jonathan Wilkinson established 101 legally binding conditions that the proponent, the China National Offshore Oil Corporation, must follow for the entirety of the project.

CNOOC bid $300 million for two offshore exploration licenses.

The conditions CNOOC must follow include measures to protect fish and fish habitat, migratory birds, the use of lands and resources by Indigenous peoples, and species at risk, according to the federal government. 

CNOOC can now proceed with obtaining additional permits from federal government departments as well as the Canada-Newfoundland and Labrador Offshore Petroleum Board.

Encouraging exploration

Provincial Natural Resources Minister Siobhan Coady said the proposal approval is a positive development for Newfoundland and Labrador's offshore oil industry. 

CNOOC, which has had offices in St. John's for several years, provided figures to the federal government indicating that 100 to 200 people would be working on the offshore drilling installation during its operation with equal that or more working in support activities.

Provincial Natural Resources Minister Siobhan Coady says a regional environmental assessment process should be online midway through 2020. (Mark Cumby/CBC)

"A lot of the big players have come to Newfoundland and Labrador, and that's a very positive development. As you've seen over the last number of years [there] is increased interest in the offshore bidding processes," Coady said.

"We have $4 billion committed to exploration offshore Newfoundland and Labrador. And that of course will drive success and drive discovery and that's what we hope to have happen." 

Coady said through seismic review and independent verification there are an estimated 650 leads and prospects for offshore oil. 

"There could be 650 Hibernias, in other words. I don't expect there is, but [there] will be discoveries made in offshore Newfoundland and Labrador and we want to make sure that companies are focused on environmental protection and, of course, safety of its workers," she said.

On top of CNOOC, eight other new entrants have entered Newfoundland and Labrador offshore oil in the last number of years, according to Coady.

Four other oil and gas companies are currently undergoing the federal environmental assessment process, which took CNOOC three years to wade through, but Coady said a regional assessment process should be online midway through 2020.

Read more from CBC Newfoundland and Labrador

With files from Cec Haire