Low oil prices have seen the petroleum sector pull back spending on exploration and development globally. The reduction in spending has been particularly noticeable in the offshore where the costs tend to be much higher and the risks much greater than onshore. But the offshore is also where the largest untapped oil and gas reserves are believed to reside. And with the price of oil rebounding somewhat in 2018, the industry appears to be dusting off delayed plans to search for giant oil and natural gas fields trapped below the ocean.
While offshore drilling statistics are hard to obtain from some jurisdictions—like Russia—the number of wells forecast to be drilled in 2017 was up a bit compared to 2016. However, that wasn’t the case in Canada, where the only offshore drilling activity is occurring in Newfoundland and Labrador and Nova Scotia.
Canada has significant oil and natural gas reserves off its shores, but when it comes to offshore production it didn’t crack the top 10 globally in 2017, as our neighbours (the U.S. and Mexico) and Middle Eastern countries ruled the roost.
A sanctioning drought for offshore projects appears to be over, as 2017 saw a number of companies give the go-ahead for development of fields on the high seas—including Husky Energy’s West White Rose. What follows are the countries where capital expenditure commitments for the offshore were the highest in 2017.
ExxonMobil’s Hebron project achieved first oil in November of 2017 and production from it is still ramping up. Meanwhile, Newfoundland and Labrador’s three offshore fields have been pumping out oil for years, while Nova Scotia’s two offshore natural gas fields have been in production for some time also. The cumulative production of all five fields is impressive.
Production from offshore oil and natural gas fields can give provincial treasuries a substantial boost. But the revenue flow can vary depending on commodity prices and how much the fields are producing in any given year—something the provincial governments of Nova Scotia and Newfoundland and Labrador know all too well.