Company looking to frack in western Newfoundland to lose licence and $1 million
Shoal Point Energy, a promoter of fracking for oil in western Newfoundland has revealed a damaging regulatory loss — one it is largely laying at the feet of the provincial government and the Canada-Newfoundland and Labrador Offshore Petroleum Board (CNLOPB).
A map of exploration licences managed by the Canada-Newfoundland and Labrador Offshore Petroleum Board (CNLOPB) in western Newfoundland. — Image courtesy of the CNLOPB
In a statement issued Thursday night, the company revealed it will be losing one of its exploration licences in the region, along with a $1-million deposit it put down for the permit.
The licence, known as EL 1097R, covers access to an area of about 500,000 acres, reaching from just off Corner Brook, up the coastline to off Gros Morne National Park.
Offshore exploration licences are awarded by the CNLOPB with requirements for specific activity, required spending on oil exploration, within set dates. The measure is meant to ensure that companies do not simply sit on permits, keeping others interested from being active in the area.
According to its own statement, Shoal Point Energy had yet to live up to its commitments within the area to which it has now lost access.
The company states it has not been able to move forward because of delays by the provincial government in providing guidelines for an environmental review of suggested projects.
It also says the CNLOPB rejected a proposal put forward that would allow for an extension on part of the company’s licence, leaving out the area around Gros Morne park. Complete loss of the existing licence and deposit “due to a change in the regulatory environment beyond its control” would be unfair, the company suggested, offering $250,000 for the partial renewal.
High and costly expectations
The EL 1097R licence was to be stripped from Shoal Point Energy in January 2013 but, at the request of the company and with a fresh cash commitment, the CNLOPB awarded a one-year extension, giving more time to get an exploratory project up and running.
The one-year timeline was despite the fact any onshore to offshore drilling program would be the first of its kind for the province.
It was also despite the fact the company’s suggested projects had been met with fierce opposition from people living in the region and anti-fracking groups with further reach.
The idea of drilling onshore to offshore and fracking in areas adjacent to Gros Morne National Park were particularly controversial, drawing cautions and pointed questions from otherwise unengaged groups and individuals.
“We are disappointed by this decision.” — Mark Jarvis, CEO of Shoal Point Energy
Not finished yet
Shoal Point’s lost licence is one of three it holds in western Newfoundland and the largest.
The area covered by the company’s licences totals about 720,000 acres, according to the latest statement. Of that total, EL 1097R covers about 500,000 acres.
As of Jan. 15, 2014, as a result of the CNLOPB’s decision, Shoal Point Energy’s exploration acreage will be cut to about 220,000 acres, confined to the areas known as EL 1070 and EL 1120.
“We are disappointed by this decision,” said Mark Jarvis, CEO of Shoal Point Energy, on the rejection of the proposal for a partial licence renewal.
“We feel that our proposal recognized and respected the importance of Gros Morne National Park, a UNESCO world heritage site. Our proposal balanced a desire to protect this unique and beautiful park with a desire to safely and responsibly develop a much needed economic opportunity on the west coast of Newfoundland.”
The statement followed a move by the company to halt trading of company securities. It is listed on the CNSX exchange under the symbol “SHP.”
While Shoal Point Energy maintains access to two offshore licence areas, it still faces a regulatory issues.
In early November, the government of Newfoundland and Labrador put a roadblock in the way of the company’s stated long-term plans — announcing applications for onshore or onshore-to-offshore oil projects involving fracking would not be accepted.
The moratorium on fracking has no set end date.
Other companies that have suggested projects involving fracking have, at least for the near term, re-focused their planning on more traditional onshore drilling projects, with no fracking involved.