Crown corporation cites commercial sensitivity when asked about speech
Premier Kathy Dunderdale revealed dramatic news regarding Nalcor Energy during her speech before the St. John’s Board of Trade last week — or she simply misspoke.
To date, no one at Nalcor has been willing to confirm comments made by the premier about Nalcor’s oil and gas division.
In her speech, before airing some dirty laundry on negotiations with the Prime Minister’s Office over the federal loan guarantee for the Lower Churchill hydro project, Dunderdale talked about government spending on early oil and gas exploration work offshore.
The work is led by Nalcor’s oil and gas division and has resulted in the identification of three new offshore basins for exploration off Labrador.
Data for dollars
“And you know what, the $30 million we invested, we’ve already recouped in licensing the data — selling it to companies to have a peek at,” Dunderdale said, to little reaction at the time.
Yet the millions in data sales would be a quick turnaround by any measure and a remarkable achievement for all involved.
As recently as Jan. 31, at the annual general meeting of the Newfoundland and Labrador Oil and Gas Industries Association in St. John’s, Nalcor Energy CEO Ed Martin suggested the data sales had not yet begun, although some potential buyers had been identified.
“So far, we’ve had discussions with numerous oil companies regarding this data, many of whom are not yet active in Newfoundland and Labrador, and they have all expressed strong interest in our findings,” he said.
The recovery of $30 million in about four months would reflect that “strong interest.”
But the premier’s statement was not immediately confirmed when a spokeswoman for Nalcor was contacted the day after the premier’s speech.
The Crown corporation has since said it can’t be, citing commercial sensitivities.
“Nalcor Energy is earning a return on our initial $30-million geoscience investment. We can’t provide commercial details on the licensing as this is commercially sensitive,” vice-president Jim Keating, lead for the oil and gas division, said in an emailed statement Monday.
“Once this information is no longer deemed commercially sensitive, we may then be in a position where we can release that information publicly,” he said.
Information about where the province is on cost recovery cannot be retrieved through access to information requests.
An inquiry on the issue was made to a spokeswoman at the premier’s office Monday afternoon, but no response was received as of press time.
Cost recovery on the $30 million aside, the premier identified the sale of offshore data as “just the crumbs,” when compared to the level of investment that data may prompt.
Martin and Keating have both made similar statements in the past, in terms of the value of the information in drawing attention to key “land sales” offshore.
A land sale involves bidding on select exploration licences, as issued by the Canada-Newfoundland and Labrador Offshore Petroleum Board (CNLOPB). When a land sale closes and a licence is awarded by the CNLOPB, the oil company’s bid becomes a commitment for a certain level of spending on advanced exploration, usually drilling, within a set time frame.
The commitment is enforced through financial and regulatory penalty.
Land sales are where the talk of interest in exploration transitions into real dollars.
A package of early exploration data in Nova Scotia, not unlike the work underway here, has renewed land sales in that jurisdiction — prompting more interest and higher bids, with new entrants like BP now in the area.
For Newfoundland and Labrador, the early exploration work is set to go farther and cover more area.
“Exploration drilling off Labrador is poised to soar to levels not seen in over 20 years,” the premier said in her speech.
“And we will earn twice, three times the amount we invested (in early exploration) through those licensing rounds.”
Licence areas off Labrador have not come up for bid since Nalcor’s basin announcement and the collection of new seismic data in 2011.
Prior to the early exploration work, in November 2011, four areas put up in an offshore land sale received no bids.