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$1.2-B buy-in for NL deepwater

Newfoundland and Labrador has new entrants and big money to keep its offshore oil and gas industry moving.

Robert Cadigan

On Thursday afternoon, the Canada-Newfoundland and Labrador Offshore Petroleum Board (CNLOPB) announced the results of the latest auction of offshore exploration licences, with companies committing a total $1.2 billion in exploration spending on seven parcels of offshore area.

"This is the largest value of bids the province has ever received in a land sale and it demonstrates that the N.L. deepwater region is a desirable investment area … even in light of current oil prices," Noia president Bob Cadigan said in a statement following release of the results.

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Eleven parcels were up for bids, encircling existing Statoil-led finds in the Flemish Pass Basin. Not all lands received exploration commitments.

The largest single spending commitment came from Statoil, with a $423-million commitment on a single parcel.

It did not break the previous record for a single bid, a $559-million commitment by an ExxonMobil-Suncor Energy-ConocoPhillips partnership in mid-December 2014.

But Statoil led the majority of bids this time around, and with partners of near-equal interest on more than one parcel who are newer to the area.

One less familiar name is Nexen Energy, making a 100 per cent buy-in on a parcel, committing $261 million.

“Look at that compared to what you showed me this morning from (a land sale in) Nova Scotia, which was what? $80 million? Versus $1.2 billion. It’s a big difference,” said Progressive Conservative Leader Paul Davis, while on the campaign trail on Port de Grave.

Prior to the writ being dropped, Davis and the PC government pushed hard on offshore oil potential, holding a news conference with Crown corporation Nalcor Energy to highlight efforts in early oil exploration work and potential reserves.

At Port de Grave harbour, fisherman Ivan Batten said, even as the search for oil is celebrated, it’s important the next government remember to protect the fishery.

“There’s a lot of us still involved with it,” he said.

Davis spoke with fishermen before heading for the campaign headquarters opening for candidate Glen Littlejohn. The PCs plan to be in the Bonavista area Friday.

Meanwhile, Statoil issued a statement noting its new commitments.

“The significant exploration investment offshore Newfoundland will provide Statoil an opportunity to further advance our established exploration position in this region,” said vice-president responsible for exploration Tim Dodson.

“It is good news for the industry and the province as a whole,” said Paul Barnes of the Canadian Association of Petroleum Producers. “In order to ensure that this industry continues to bring benefits to the province through jobs and royalties, NL needs to keep developing new projects, which is not possible without exploration activity to find new resources to develop. These results are a good first step. It’s also very positive to see a new entrant — Nexen. It’s always encouraging  to see different players looking at the geology of the (local) basin and undertaking exploration activity.”

Corrected from earlier version

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