March has not been kind to the offshore oil and gas sector in Nova Scotia.
Wednesday morning allNovaScotia.com reported (note: this site has a paywall) that BP will delay exploration drilling in Nova Scotia waters by a year to mid-2018. The company’s original timeline was to drill in 2017.
This announcement comes roughly four weeks after Shell was forced to shut down drilling at its Cheshire exploration well 225 kilometres offshore of Nova Scotia during rough seas.
Shell lost the riser tensioner system during the incident. It connects the rig to the well during drilling. The riser sank to the seabed and has not been recovered. Drilling has been suspended ever since with no word on when it will resume.
BP spokesperson Anita Perry told allNovaScotia that the extra time gives BP the chance to finalize its exploration well locations, and you have to take her at her word on that.
However, if you’re a proponent of a robust oil and gas sector in Nova Scotia, this announcement might seem ominous as BP looks to cut 4,000 jobs by the end of 2017.
Could BP’s Scotian Basin Exploration Project fall victim to the drive to cut costs during a severe industry downturn with no end is in sight?
I wouldn’t bet any money on that right now.
BP did acquire the four offshore blocks in 2013 for $1 billion. If it did decide to walk away from its Nova Scotia acreage without doing any drilling, that’s quite a sunken cost – even for a super major like BP.
Plus, the company has the exploration rights to its four parcels until 2021. There is still plenty of time to poke holes in the seabed even with this change in schedule.
But when you’re as keen to see exploration, and big discoveries, as the Nova Scotia business community and government appear to be, this bit of news isn’t welcome at all.