ST. JOHN’S, N.L. – Newfoundland and Labrador’s offshore oil regulator has announced a revamped land tenure system that the province says will boost exploration and attract global investors.
Natural Resources Minister Derrick Dalley said Thursday the new scheduled bidding regime will allow more time to gather and assess seismic data, opening the door to more international companies.
The Canada-Newfoundland and Labrador Offshore Petroleum Board announced the land tenure system will now operate in four-year, two-year and one-year cycles based on levels of activity in selected regions.
Companies interested in exploring those regions with the least activity will now have up to 48 months to assess parcels in lesser known basins.
Premier Kathy Dunderdale said last June that the land tenure system was outdated and often forced new players to decide on offshore bids within seven months. She made the comment just before heading to China on a trade mission aimed at drumming up interest and investment in the province’s offshore sector.
Robert Cadigan, president and CEO of the Newfoundland and Labrador Oil and Gas Industries Association, said the changes update an outmoded land purchase system dating back to 1988.
Up until now, a single-tier nomination process gave companies seven months from the time the regulator issued nomination calls for specific areas until they had to submit costly bids, he explained.
New players generally need about three years to commit to an exploration investment.
“If you’re not in the region then, really, how do you participate?” Cadigan asked. “In reality, it really froze out new players looking at entering the market.”
Jim Keating, vice-president of oil and gas for Crown corporation Nalcor Energy, said the land tenure changes are coupled with the province’s efforts to collect seismic data and make it available for prospective investors.
“Lack of good quality data is one of our big impediments to exploration,” he said in an interview.
“Newfoundland and Labrador is currently getting less than one per cent of the total offshore exploration spend which today amounts to about $60 billion worldwide,” Keating said.
“We believe one per cent is far too little … especially when you consider the vast area we have on our doorstep.”
Cadigan said there wasn’t the same push for such changes earlier because it was widely believed that the province’s big offshore oil finds had already been made.
That perception is changing.
Nalcor announced earlier this year three potential new oil basins off Labrador. Cadigan said it’s an area the size of the Gulf of Mexico.
“We’ve got a lot of prospects.”
Newfoundland and Labrador relies on offshore oil for one third of its government revenues.