Shoal Point Energy takes hit, blames N.L. and CNLOPB

Ashley
Ashley Fitzpatrick
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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.

 

afitzpatrick@thetelegram.com

Organizations: UNESCO

Geographic location: Newfoundland and Labrador, Corner Brook, Gros Morne National Park Gros

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Recent comments

  • Cindy
    December 15, 2013 - 08:27

    I am very pleased to see our Government finally make a decision to protect the people and our environment.

  • average joe
    December 14, 2013 - 16:58

    Well, well; the Anti's have had a great year on the west coast driving away new business..No worries though, there should be lots of work in tourism..I wonder what the average wage in that industry is?

  • XWORKNDOG
    December 13, 2013 - 14:54

    WOW it looks like if the govt doesn't like you here they can have you put down, and it appears the nice people in NL would agree with it. So it is ok for the govt to steal investors money and give it to their buddies, just like in Russa . It would seem that it is ok for the BIG oil companies to FRACK the ocean floor to get their oil , by the millions of barrols every year that is used to pollute our planet but when a small company spends millions to develop a resource to make it valuable the govt uses its sweeping communist powers to steal it with the help of the unwitting people--this action is being heard around the world ,even as you read this, there are people sending news of NLs actions , the investment community world wide will be made very aware of what the govt has done here and how the people supported them

    • Information-Based
      December 15, 2013 - 03:01

      Get over yourself, comrade... back in reality, this is about a company "not using it and losing it" even after a year's extension. Sure it's a big pile of money, but they knew the risks beforehand. I'm no fan of this gov't either, by the way, but your take on the matter is a little out to lunch.

  • barry
    December 13, 2013 - 14:07

    this just smells funny to me, there will be fracking in newfoundland,.they are taking this land from shoal point energy to give to a bigger comapny with more money and more power, power so the people protesting will have no rights at all, at least with shoal point it would move slow and then you would get all the answers from fracking and you could watch it closely, but when the big pockets move in, its going to be fast,

  • barry
    December 13, 2013 - 14:05

    this just smells funny to me, there will be fracking in newfoundland,.they are taking this land from shoal point energy to give to a bigger comapny with more money and more power, power so the people protesting will have no rights at all, at least with shoal point it would move slow and then you would get all the answers from fracking and you could watch it closely, but when the big pockets move in, its going to be fast,

  • len
    December 13, 2013 - 12:07

    strange this lease is upto 130 km from the park yet other companies fracking for gas sit on the parks back door ,yet go unquestioned, this action could not be a result of this company finally realizing the true value of it's assets and the govt. wanting a bigger cut. two months back I was warned about investing in a russian company now I know what my broker was talking about, I won't be investing in NL ever again. This govt took this resourcs because of it.s value and no other reason,their lack of regard for the investors who lost 10s of millions to govt greed will be heard for a long time and I for one will help spread that message

  • Robert
    December 13, 2013 - 11:51

    May I suggest this $1 million be held in trust until a decision is made. It does seem rather hostile to simply take the money and run but at the same time in the oil business being in line with regulations (that do and will change) is all part of the oil business. Imagine all the moneys tied up in Western Canada while the USA decides if it wants a pipeline down through its bread basket!!

  • Jim
    December 13, 2013 - 11:49

    It is unfortunate that the government has treated this company poorly. It would be nice to see a growth in the economy while companies maintain safe practice. It has been done for many years in Canada without a single case of drinking water contamination. Many friends have moved to Alberta in search of quality employment. I guess we will see the final outcome in time.

  • Virginia Waters
    December 13, 2013 - 10:19

    Not impressed by the PR campaign Shoal Energy mounted on the fracking front. Don't like tired old politicians trying to soft-sell a technology about which they know precious little - especially when they have friends in the industry. Don't know what the future is for fracking but do know that its far too early to give it the green light. And if, at some point in the future, it is found to be reasonable under very limited circumstances, it should never, ever be approved for use alongside a national park. Not sure how much of the $1 million loss cited by Shoal Energy actually stems from the fracking ban. Need more details on the parcels, the time frames, the commitments and the extent to which changes in government policy impacted those commitments. That said, and while I have no love for people who feel that public lands are theirs to use as they see fit, I think the company should be compensated to the extent it can prove it was treated unfairly by government.

  • barry
    December 13, 2013 - 10:08

    you give a company a lease of land to drill on for oil, they pay 1 million dollars for that lease, they discover a huge amount of oil on that land, then you change the rules so they can not drill any longer, time runs out, you take the land back from that company along with the 1 million dollars , then you sell it to another company for a much greater amount of money because now everyone knows how much oil is on that lease. is this correct? im just trying to figure out how this system works?

  • barry
    December 13, 2013 - 10:06

    you give a company a lease of land to drill on for oil, they pay 1 million dollars for that lease, they discover a huge amount of oil on that land, then you change the rules so they can not drill any longer, time runs out, you take the land back from that company along with the 1 million dollars , then you sell it to another company for a much greater amount of money because now everyone knows how much oil is on that lease. is this correct? im just trying to figure out how this system works?

  • Jack
    December 13, 2013 - 09:15

    While I admit that I'm against hydraulic fracturing, I'm more than appalled at the Newfoundland and Labrador Government and Canada - Newfoundland and Labrador Offshore Petroleum Board for not only taking away exploration licenses from junior exploration companies like Shoal Point Energy and one of its parent companies, Canadian Imperial Venture, but also stealing money from them as they won't refund the $1 million deposit. As a result of the Dunderdale Government's thievery and act of political piracy, junior and regular exploration companies will no longer be willing to come to Newfoundland and Labrador to search for valuable resources needed to grow our economy; in short, every single Newfoundlander and Labradorian will suffer. Keep in mind that $1 million may not seem much to an oil giant, but for a junior exploration companies trying to establish themselves like Shoal Point Energy and Canadian Imperial Venture, its a considerable amount of money. That is why the Dunderdale Government and C-NLOPB must do the right thing and return the $1 million deposit to Shoal Point Energy. Otherwise, their actions will deter future junior or regular companies from investing in this province and hurting much needed jobs in the process.

    • Al
      December 13, 2013 - 18:33

      No Government should ever do what the Newfoundland Government has done; bullying and stealing money from junior Companys and it's investors. This sends a strong message that future junior companies need not bother investing in Newfoundland and Labrador, as the Government can't be trusted.

    • amy king
      December 18, 2013 - 16:13

      They took Shoal Point's money , stopped them from fracking and refused to renew their license. What kind of skullduggery is this? Newfoundland you are the laughing stock of the stock market world.