BP scales back Nova Scotia plans due to lack of wells

BP scales back Nova Scotia plans due to lack of wells

/ Oil & Gas / Tuesday, 22 January 2019 10:17

The Canada-Nova Scotia Offshore Petroleum Board has said that BP Canada will scale back half its oil and gas exploration plans off Nova Scotia. The energy giant will surrender 50 per cent of the area included in its license – a consolidation of four offshore parcels roughly 300 kilometres southeast of Halifax – after it had failed to pass the first phase of its exploration license.

It was announced in November that project partner Hess Corp.’s first well did not encounter commercial quantities of hydrocarbon in the Scotian Basin exploration drilling project. Shell Canada said it had closed two sea exploration wells the previous year for the same reason. 

The offshore petroleum board has said that BP has failed to drill four wells within the first phase of its exploration license, required for the second phase to be approved. If BP does not drill a well during its extension period, the company would forfeit the deposit and either surrender the remaining area under its exploration license, or be required to make a $2-million deposit for another one-year extension.

The company has opted to pay a $1-million deposit to extend the first phase of its exploration license, which ended Monday, by one year, the board said. BP would still need to apply for authorization if it decides to drill a well during the extension period.

Though the situation appears to challenge the province’s offshore potential, an energy analyst said the decision is in large part about market forces. Maureen Herchak, a spokeswoman for BP Canada, said the company’s decision to give up half its “very large acreage” comes as a result of routine licence management activity.

The Nova Scotia government has heavily promoted the province’s offshore oil and gas sector in recent years, estimating a potential resource of 121 trillion cubic feet of gas and eight billion barrels of oil.

BP won the right to explore in Nova Scotia’s offshore after it submitted a $1-billion bid in 2012; the highest ever accepted for deepwater exploration rights in Atlantic Canada.

BP continues to evaluate data from its first exploration well in the area – the Aspy D-11 well, which reached a total depth of 7,400 metres.

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