Offshore oil and gas auction brings in $758M for Newfoundland and Labrador

ST JOHNS, N.L. – Newfoundland and Labrador has pulled in $758 million in work commitments for offshore oil and gas development in a licence auction that ended Wednesday.

The figure is down from the $1.2 billion in commitments the province received in last year’s auction in the same region a few hundred kilometres off the east coast of Newfoundland.

The Canada-Newfoundland and Labrador Offshore Petroleum Board offered 16 parcels totalling about 3.3 million hectares in the latest round, with successful bids submitted on eight of those.

The highest bid for a parcel was $276 million from a joint offering by BP Canada Energy Group, Hess Canada Oil and Gas, and Noble Energy Canada.

Nalcor Energy said in August that the area up for auction was estimated to have a potential 25.5 billion barrels of oil and 20.6 trillion cubic feet of gas, while last year’s auction parcels were estimated to hold 12 billion barrels of oil and 113 trillion cubic feet of gas.

The province’s offshore oil industry has seen spending cuts and deferred projects since the oil price collapse, which has also resulted in a drop in royalty payments to the government.