Shell Canada is being awarded multiple exploration licences for offshore Nova Scotia, after coming out on top in a land sale by the Canada-Nova Scotia Offshore Petroleum Board (CNSOPB).
The company successfully bid on four land parcels, offering to spend $970 million on exploration within the next six years.
"These new deepwater blocks represent an important addition to Shell's global exploration portfolio," stated David Lawrence, executive vice president, exploration and commercial, with Shell Upstream Americas.
Shell's bids stand, in total, as the highest amount ever received by the CNSOPB in a call for bids on exploration licences.
"The (CNSOPB) will proceed with issuing exploration licences effective March 1, 2012 to Shell Canada Limited for these parcels, pending final ministerial approval by both the federal and provincial governments," board CEO Stuart Pinks said in a news release Friday.
Shell will have to deposit 25 per cent of each of its four bids up front with the regulator.
The call for bids - for areas located about 200 kilometres off Southwest Nova Scotia - required bidders to have had experience in drilling to depths greater than 800 metres within the last 10 years.
The news of Shell's interest in the area has been welcomed by suppliers and energy sector players in the Maritimes.
"As an association representing businesses that provide goods and services to the energy industry, any time there is progress in one sector is good for our business," Maritimes Energy Association (formerly OTANS) chairman Joe ` said in a news release.
Meanwhile, executive director of the association, Barbara Pike, tipped her hat to the government for encouraging oil exploration off Nova Scotia, where gas has so far been king.
"The Nova Scotia government and the Department of Energy should be congratulated for investing in the Play Fairway Analysis that independently showed the super majors there is oil offshore Nova Scotia," she stated.
Over the last three years, the provincial government has invested $15 million, alongside investment from Nova Scotia's post-secondary institutions and the federal government, to create a 350-page atlas of the province's offshore area.
"We knew that lack of knowledge about the area's geology was a barrier to further exploration," Nova Scotia Energy minister Charlie Parker said Friday. "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."
Premier Darrell Dexter has called the return of Shell Canada to the area an "important milestone" in reinvigorating interest in Nova Scotia's offshore.
Federally, both Natural Resources Minister Joe Oliver and the regional minister for Nova Scotia, Peter MacKay, applauded the deal.
According to the CNSOPB, no bids were received on four of the eight parcels of land included in the call for bids.
The board is accepting nominations for areas to be considered for offer in the next call for bids. That call is expected to be issued in May.
Shell Canada response to CNSOPB call for bids
Parcel 1 - $1,756,450
Parcel 2 - $303,078,225
Parcel 3 - $235,025,888
Parcel 4 - $430,139,437
Total - $970,000,000
Source: Canada-Nova Scotia Offshore Petroleum Board
Offshore exploration licence areas recently offered for bids in Nova Scotia. Shell Canada has since been awarded rights to explore four of the eight land parcels (plots one through four).