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An oil platform offshore Newfoundland

Page by page, Ed Martin lays out his vision for the future of offshore oil in Newfoundland and Labrador. One map compares the scale of basins to the Gulf of Mexico, another to the North Sea. A third shows the province's untapped basins beneath a new frontier of sloping and deepwater seabed.

The three rudimentary maps are hardly the stuff billion-dollar oil plays are made of, but they represent a 180-degree shift for the province, which has traditionally left testing to the private sector. That's changing. This year, Nalcor Energy, the provincial Crown corporation led by Mr. Martin, completed three years of detailed 2-D offshore seismic testing to hint at what lies beneath. The results indicate, though don't prove, where to find oil. Nalcor is now sharing that information with major oil producers in hopes of spurring Canada's next generation of offshore development.

"The conventional wisdom is that Newfoundland and Labrador's offshore – Canada's offshore on the East Coast – you know, we've had a few finds, we've produced those things, and we're probably in decline with respect to production over the next 20 years," Mr. Martin, Nalcor's president and chief executive officer, told The Globe and Mail in a recent interview. "Nothing could be further from the truth. That's what this [mapping] is designed to indicate to folks – just why this is one of the last big undeveloped frontiers in the world today."

At a time when Alberta's landlocked oil is selling at a discount and bottlenecked without new pipelines, offshore is different. It can easily access global markets and fetch higher international Brent prices. Royalties from existing offshore production provide 24 per cent of provincial revenues.

There are barriers, however, including capital costs. Newfoundland's fourth offshore project, Hebron, is under construction at a cost of $14-billion. The province is pushing to attract more investment and exploration, which Mr. Martin says has not kept pace with the North Sea.

Four decades ago, "seismic work took off, exploration took off in conjunction with it and their production profiles took off," he said of Britain and Norway. "In Newfoundland's case, we started the same but we stopped."

Newfoundland now produces between 200,000 and 250,000 barrels a day, and Hebron could push that to 400,000 barrels.

Mr. Martin is hoping Newfoundland's sector can expand, with the seismic testing (at a cost of $15-million by the end of 2013) and recent changes to the Canada-Newfoundland and Labrador Offshore Petroleum Board's regulatory regime that, in effect, allow more time for companies to do testing before making a bid. Nalcor announced additional seismic testing last month.

"We're doing it with the sole purpose of getting [maps] out to as many companies as we possibly can get it out to. That's going to increase the knowledge of the basin, that's going to increase competition for the bids," Mr. Martin says. ".. .Comparing ourselves to the North Sea, and what's happened over time, it's our view that this will probably be one of the highest prospective producing areas in the world over the next 20 or 30 years."

Exploration is already happening without the maps – Norway's Statoil ASA made a large find last year, Bay du Nord, expected to hold up to 600 million barrels. Like the existing platforms, it is in relatively shallow water east of St. John's. The new basins in Nalcor's maps are further north, typically deeper and farther offshore. Parts of the basins are also beyond Canada's waters; if developed, the United Nations would be entitled to a cut of the royalties.

"It's not without challenges, right? It will be more costly and it will take longer and there'll be safety issues people have to be concerned with, but all those things will be part-in-parcel with the process," says Wade Locke, an economist at Newfoundland's Memorial University. He said the mapping is a positive development. "But, again, until people sink a well and find something, it's hope. Albeit hope bolstered by more information, but it's hope."

Mr. Martin is confident the industry will be interested, despite the depths, and that environmental precautions are sufficient. He brushes aside suggestions of tax breaks to spur development.

"This is what's going to drive, especially in offshore slope and deep-water," he says, tapping the maps. "We know this is what's required. My prediction is it will take off, for all the reasons I talked about here. It's a flywheel effect. Once this [exploration] starts happening, once you hit and hit and hit again, the eyes of the world are going to turn here. And that's when it's really going to take off. And we believe it's there."

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