Why Nova Scotia is making a six-figure bet on the Sydney Basin

Why Nova Scotia is making a six-figure bet on the Sydney Basin

The Nova Scotia government is investing almost $900,000 to gain a better understanding of the oil and gas potential off the coast of Cape Breton Island.

The Liberal government announced in late January it has awarded French petroleum consultant company Belcip-Franlab the contract to develop a comprehensive geoscience picture of the Sydney Basin. It’s spending $854,000 on the project. The basin is a large, and mostly shallow water offshore region between Cape Breton and Newfoundland and Labrador that’s been ignored by the oil and gas industry for decades. Only two wells have been drilled on the Nova Scotia side of the basin, both in the 1970s, one by Murphy Oil and the other by Shell.

The Nova Scotia government is hoping this venture will pique the interest of the industry one more time. It expects the geoscience work to be finished this summer and the results will be made public. “We know our offshore potential is tremendous, and that’s why we continue to increase our knowledge locally so we can build our competitive advantage globally,” acting Energy Minister Lloyd Hines said in a press release.

The Sydney Basin work will build on previous research to develop the Play Fairway Analysis released in 2011. The analysis indicates Nova Scotia has more than 120 trillion cubic feet of natural gas and eight billion barrels of oil in the province’s offshore. The Play Fairway Analysis has been credited with renewing interest in Nova Scotia’s offshore. In 2012, BP and Shell bid over $1 billion to secure the rights to explore on eight offshore parcels. However, since that big splash industry interest has cooled considerably. Three of the last four calls for bids held by the Canada-Nova Scotia Offshore Petroleum Board have received no bids, with the 2015 round being the only one to receive industry spending commitments. Statoil Canada bid $82 million to pick up two exploration parcels that year.

In Newfoundland and Labrador, the Canada-Newfoundland and Labrador Offshore Petroleum Board’s last three calls for bids have resulted in $2.6 billion in bids and 16 parcels snapped up by oil and gas companies, dwarfing what is happening in Nova Scotia. However, if Belcip-Franlab’s work can uncover indications of oil and gas potential in the Sydney Basin, the area does have some things going for it. Logistically, it’s less challenging than the Grand Banks and Flemish Pass areas of offshore Newfoundland and it is closer to North American markets with easier access to export venues. Plus, any Sydney Basin gas discoveries could be tied into the nearby Maritimes and Northeast pipeline.

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