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Newfoundland and Labrador establishes new offshore exploration initiative

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Oilfield Technology,

The Government of Newfoundland and Labrador has announced the establishment of a new offshore exploration initiative to provide companies with the incentive to drill more wells in the best prospects.

The policy measure is designed to allow all future bid deposit forfeitures to be reinvested as received, resulting in an injection of hundreds of millions of dollars in support of growth in the region's offshore petroleum industry. The measure is intended to allow near term drilling activity and employment, enhance global competitiveness at a critical time, and position the province to realise its significant resource potential.

Annually, the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) issues calls for bids for exploration licences in the province’s offshore. The sole criterion for selecting a winning bid is the total amount of money the bidder commits to spend on exploration of the parcel. The successful bidder is required to post a security deposit for 25% of the work expenditure bid. If the bidder does not meet its work commitment, the security deposit is forfeit and the investment opportunity is lost. The new policy decision announced will allow forfeited security deposits to be reinvested into offshore exploration projects.

By funding a percentage of well costs beyond the first well drilled on a license, the Government of Newfoundland and Labrador will ensure that those funds are reinvested back into our offshore with maximum effect to yield those high impact discoveries that create our future projects.

Further details on this initiative will be released in the coming weeks.

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