The Canada-Newfoundland and Labrador Offshore Petroleum Board released the results of its 2017 call for bids, and they were kind of ‘meh’.
Calgary-based Husky Energy and BP Canada bid approximately $15 million and went 50-50 on a parcel in the Jeanne d’Arc Basin. No other bids were received for two other parcels up for grabs in the same area.
It’s a big letdown considering the 2016 call for bids resulted in over $750 million in work commitments, and the 2015 call for bids garnered $1.2 billion.
With ExxonMobil’s Hebron offshore field nearing first oil, and Husky sanctioning West White Rose in May, Newfoundland and Labrador’s oil and gas industry has been feeling pretty good about itself lately after enduring a tough couple of years amid an industry downturn.
The question is – does the low spending commitment mean the industry is losing interest in the province’s oil and gas potential?
There will be some people who point to the federal government’s discussion paper reviewing its environmental and regulatory processes as creating uncertainty among industry players and scaring away investment in the province.
But the lack of interest this year might also have something to do with the fact the three parcels were located in the Jeanne d’Arc Basin, where the province’s three producing offshore oil fields are located and there is already multiple exploration and significant discovery licences in place.
It’s quite possible industry just didn’t see much upside in the three parcels being offered by the C-NLOPB this year rather than being scared off by potential regulatory changes.
For example, last year’s call for bids included parcels located in the eastern Newfoundland region where far fewer wells have been drilled and the potential to find elephant fields is considered greater. The 2015 call for bids also included several parcels located in that region, as well as some in the Jeanne d’Arc.
So is this a worrisome trend or merely a blip?
If subsequent calls for bids yield similar results as this year’s, that will be a much stronger indication Newfoundland and Labrador is losing investment compared to other jurisdictions in the world.