Energy minister undeterred as offshore drilling dries up
'This is all part of the process,' says Derek Mombourquette
Nova Scotia's energy minister says he remains confident in the potential of the province's offshore, despite the most recent drilling effort failing to find a commercially viable resource.
Earlier this week, Hess Corporation, a partner with BP Canada in the Scotian Basin Exploration Drilling Project, announced they would permanently seal a well after drilling down 7,400 metres.
While BP still holds exploratory licences for other areas until January 2022 as part of a $1-billion exploration commitment, there are currently no applications from it or any other company looking to drill, according to a spokesperson for the Canada Nova Scotia Offshore Petroleum Board.
'A long-term process'
The news comes on the heels of Shell Canada capping two of its own exploratory wells in the last two years when it failed to find what it was seeking.
None of this, however, deters Energy Minister Derek Mombourquette, who said this week he remains "very optimistic."
"This is a long-term process. So it takes time and BP is still committed to the area," he said.
Mombourquette said his confidence is rooted in the province's own science and research, which produced the Play Fairway Analysis, a document that essentially acts as a map of the province's resources, geology and topography offshore that can be used by companies to make exploration decisions.
"We've spent millions of dollars in the last number of years on [the analysis], which tells us that there is resources offshore."
Considering other options
But Wade Locke, a professor at Memorial University with a specialty in resource economics, said companies tend to be drawn to areas where resources are being found or prospects of a find are high.
If a company is spending $300 million on a well and gets no return, "you can do that maybe once, maybe twice," he said by phone from St. John's.
It's not long after that, said Locke, that a company's shareholders begin pushing in favour of options that are more likely to deliver results on an investment.
"A lot of these guys are myopic in the sense that success today determines their assessment of success tomorrow, and lack of success today is a strong influence around their perception of success tomorrow."
It's telling, he said, that there are no current drilling applications before the offshore petroleum board.
"If these things were highly marketable and had huge value, then people would be knocking at your door, lining up to come drill or to bid for land sales that you have. And if that's not happening, it's not happening for a reason."
Mombourquette, however, remains undeterred.
Noting what offshore royalties have done for the province in the past and what the government hopes they can do in the future, marketing of the area would continue in hopes someone will find a worthwhile deposit, he said.
The minister said he doesn't consider recent exploratory history here to be a failure and isn't worried about the potential lure of other areas that could be more promising.
BP has "a vast array of data" from the most recent drilling and it will take time to analyze the information, he said.
"I think this is all part of the process as we continue down the path of resource development in the offshore," said Mombourquette.
"We've had success in the past and I believe we'll have success in the future."