Shell to spend $1B on N.S.'s offshore oil and gas
Shell Canada will spend almost $1 billion exploring Nova Scotia's offshore oil and gas deposits over the next six years.
The Canada-Nova Scotia Offshore Petroleum Board said Friday that Shell won its call for bids and has secured the exploration rights.
The company will spend $970 million for the work on four parcels of deep-water land off the province's southwestern shore. That is the highest bid ever in Atlantic Canada.
"Shell demonstrated that it has extensive worldwide experience in deepwater drilling, including involvement in three previous deepwater exploratory wells drilled offshore Nova Scotia and Newfoundland," the board said.
Shell now has the right to drill off the Scotia Shelf in water ranging in depth from 1,400 to 3,700 metres, according to Stuart Pinks, CEO of the petroleum board.
"It tells me there is some significant confidence in the potential of the offshore of Nova Scotia," he said.
The bid needs federal and provincial approval. Premier Darrell Dexter has already backed the move. He said the return of one of the world's top five oil and gas companies will create jobs and generate hundreds of millions of dollars of investment.
"It's a great day for Nova Scotia at a time, generally speaking, when the world is going through recessionary pressures," he told a news conference.
"This will inevitably mean that the others will start to say, 'If they have this level of interest in the offshore, what have we missed?"'
Dexter said the government would continue seeking more bids on the remainder of the blocks. The next call for bids will be issued in May.
"The job is not complete," he said.
$15M offshore atlas shows potential
The province has spent $15 million developing a 350-page atlas of the offshore potential over the last three years. Energy Minister Charlie Parker credited that in part with reviving the industry.
"We knew that lack of knowledge about the area's geology was a barrier to further exploration," he said.
"We invested in world-class research and committed to sharing our findings with oil and gas companies around the world. We're seeing the results of that investment today."
Shell Canada said it is pleased with the news.
"We welcome the opportunity to return to exploration in offshore Nova Scotia, where we have had a continued exploration and production presence for over 40 years, since our first exploration well in the province," said David Lawrence, an executive vice-president with Shell.
"These new deepwater blocks represent an important addition to Shell's global exploration portfolio."
'This shows they are very serious'
It's great news, according to Barbara Pike, executive director of the Maritime Energy Association.
"When you start looking at the amount of commitment on these leases, we're talking about hundreds of millions of dollars," she said.
"This is a company that not only does it have a very strong background in this region and is a very reputable company, [but] this shows they are very serious about this and that they're going to be going out there aggressively looking for oil."
The exploration licences are set to begin March 1, pending approval by the federal and provincial governments. Shell is required to post a 25 per cent deposit of its bid under the agreement.
The next call for Nova Scotia offshore bids will be in May.
Unlike Newfoundland and Labrador, where a wealth of offshore resources has turned that province's finances around, Nova Scotia's petroleum industry is relatively small and has experienced struggles.
The Deep Panuke natural gas project, about 250 kilometres southeast of Halifax, has encountered repeated delays. It is expected to go online this year.
Nova Scotia last sought exploration bids in 2009. It received no bids then.
- An earlier version of this article said four companies had bid for the rights. In fact, all four successful bids were from Shell. It is not known if other companies issued bids.Jan 20, 2012 12:00 PM AT
With files from The Canadian Press