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A drilling rig. (Paul Wolf/Getty Images/iStockphoto)
A drilling rig. (Paul Wolf/Getty Images/iStockphoto)

BP, Shell granted deepwater exploration rights off N.S. Add to ...

BP PLC has been granted the right to explore in Nova Scotia’s offshore after the energy giant submitted a $1-billion bid, the highest ever accepted for deepwater exploration rights in Atlantic Canada.

The announcement by the Canada-Nova Scotia Offshore Petroleum Board raises hopes that the cash-strapped province can strike oil and expand its offshore energy industry, which has experienced setbacks in recent years.

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“This is a strong endorsement of the valuable work our province has done to provide the industry with a clearer picture of Nova Scotia’s offshore geology and potential,” Premier Darrell Dexter told a news conference Friday in Halifax.

The board awarded BP, which has committed to spend more than $1-billion over the next six years, the right to explore four deepwater blocks about 300 kilometres southeast of Halifax. The area covers almost 14,000 square kilometres and is in water depths ranging from 100 metres to more than 3,000 metres.

Mike Daly, BP’s executive vice-president of exploration, said the company’s entry into Nova Scotia’s offshore is in line with its growing focus on future exploration.

“This award gives us access to a significant piece of geology, one of the most promising new deepwater areas to be licensed in recent years,” Mr. Daly said in a statement.

“Exploration is a key driver of future growth for BP, and access to prospective new acreage such as this is essential.”

The announcement came a day after the company agreed to pay a record $4.5-billion (U.S.) fine in the U.S. for the explosion and oil spill that killed 11 drill rig workers and devastated the Gulf of Mexico in 2010.

Mr. Dexter said he does not ignore what happened in the Gulf, but he is confident in the province’s offshore regulatory regime, which he said was “one of the strongest in the world.”

“I know that much has been learned after what happened in the Gulf and the demands that we put on companies is to ensure that they operate in a safe, responsible, high-quality manner,” he said.

Shell Canada Ltd. was also given exploration rights to four parcels – two in the Sable Island area and two in deepwater – for its $32-million bid. In January, the company won the rights to explore four deepwater areas after it bid $970-million in the hopes of finding oil.

Unlike Newfoundland and Labrador, where a wealth of offshore resources has turned that province’s finances around, Nova Scotia’s petroleum industry is relatively small and has endured its struggles.

Output from the Sable offshore natural gas project, located about 225 km off Nova Scotia’s east coast, has been in decline for a decade. The platform is not in full production after planned maintenance in September uncovered additional work to be done.

The Deep Panuke natural gas project, about 250 kilometres southeast of Halifax, has encountered repeated delays. It was expected to go online this year, but this week it was announced that won’t happen until next year.

Barbara Pike of the Maritimes Energy Association said BP’s bid would result in job spinoffs that would mainly come from companies that provide goods and services such as food, clothing, fabricating and engineering.

She said there may also be a need for supply bases in addition to facilities already operating in Halifax and Mulgrave.

“Let [the oil companies] find something and then we can start taking a look at whether or not there’s a need, and the operators will demand a much larger number of supply bases around the province,” said Ms. Pike.

Once the province grants its final approval, the exploration licences would be issued and take effect as of Jan. 1.

The companies would then have 90 days to submit their exploration plans to the board and will have six years to validate the licence by drilling a well.

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