For the second straight year, the oil and gas industry has passed on the opportunity to grab acreage in Nova Scotia’s offshore.
The Canada-Nova Scotia Offshore Petroleum Board announced on Monday it had received no takers on its 2017 call for bids round. The same thing occurred in 2016.
The last time the oil and gas industry snapped up any land in the Board’s annual licensing round was in 2015. That year Statoil Canada Ltd. bid $82 million and was awarded two offshore parcels.
This year’s call for bids included three parcels located in relatively virgin territory for the oil and gas industry. The parcels were east of Cape Breton Island in a geological region known as the Sydney Basin in water depths between 50 and 450 metres.
It can be tough to get interest in a ‘frontier’ area like the Sydney Basin – even at a time when oil prices are starting to recover. But is this also a case of industry looking at the poor results of Shell Canada’s Shelburne Basin exploration program and deciding Nova Scotia is no longer a place worth investing in?
In the oil and gas industry, and in just about every industry, perception is reality. And while BP will be conducting its own exploration program in Nova Scotia waters in 2018, the perception in the sector could be that now is not the time to be drilling any costly offshore wells in an area that is unproven as a place to find hydrocarbons.
These results come about a month after the Canada-Newfoundland and Labrador Offshore Petroleum Board’s 2017 call for bids resulted in just $15 million in spending commitments.
A pessimist would say this is a sign that Nova Scotia, and Atlantic Canada in general, is no longer seen as an attractive place to invest in.
However, an optimist would say this is just a lull in an industry that is cyclical, and with only so many politically stable (and available) regions in the world companies can explore in, the sector’s players will eventually come back to Atlantic Canada.
With companies taking a long-term view on where they will spend their dollars, it may be several years before we find out what oil and gas companies really think of Atlantic Canada as an investment destination.