In recent years, Nalcor Energy’s Oil and Gas division has embarked upon a series of early exploration projects — pre-drilling work — meant to gather new information and promote the potential for economic oil discoveries in Newfoundland and Labrador’s massive offshore area.
Simplified, according to Nalcor’s own presentations, the key to a prosperous future for the province’s oil industry is more drilling, and the early works are meant to help attract just that.
Attracting exploration dollars, particularly in deep water, is challenge enough when dealing with known companies familiar with the environment, but according to Nalcor vice-president Jim Keating, attracting entirely new players is a greater challenge.
The challenge is currently being tackled by Keating and his team, who have been travelling the world in recent years with the results of their ongoing early exploration work, searching for companies that might ultimately buy into the province’s offshore oil and gas industry.
The team sells Eastern Canada as a new frontier, given the low level of exploration to date relative to the size of the offshore area. It pitches to the deep pockets of the so-called supermajors, but more importantly to potential newcomers to Newfoundland and Labrador.
In a recent interview, while not offering specific names, Keating told The Telegram Nalcor has been presenting to the “new independents” — mid-sized oil companies with a talent for proving up new frontiers, like the Orphan Basin or offshore Labrador.
The 30 to 40 mid-sized companies falling into the category are not household names like the supermajors, such as BP or ExxonMobil, but they would have developed a reputation in the global industry as specialist explorers.
“Their job is to go in first, to prove up. They’re heavily geoscience focused. And when they have a project of size and substance, they sell it or farm out to (supermajors),” Keating said.
Attracting these companies for exploration work would mean more wells, more quickly, adding to the potential for more rapid, new discoveries offshore Newfoundland and Labrador.
And just how important are the mid-sized explorers?
“Thirty per cent of the offshore exploration expenditure is coming from (supermajors). Seventy per cent is coming from someone else,” Keating said.
The results one way or another on Nalcor Energy’s approach to attracting new entrants to the province’s offshore will come as bids on offshore exploration licences are revealed by the Canada-Newfoundland and Labrador Offshore Petroleum Board (CNLOPB), under newly revamped licencing rules, in the coming years.
An available licence offshore Labrador, in an area for which Nalcor has sought and obtained new seismic data, will be one to watch closely for returns.
But the real test for new area entrants will be in the years that follow, on licences wherein long lead time has been granted to allow companies time to review data and consider betting their bottom dollar in Eastern Canada.