Oil giant Shell is driving a surge in oil exploration interest off the coast of Newfoundland after several years of stagnation.
Newfoundland and Labrador’s offshore energy regulator says the London-headquartered company successfully bid on six exploration licenses off the province’s east and southeast coast.
The licenses are for six parcels of offshore area encompassing more than 15,000 square kilometres, for which Shell pledged more than $210 million in exploration work.
The company also partnered with Norwegian energy giant Equinor on two other licenses totalling 1,230 square kilometres, for a total work commitment of $30 million.
Shell recently announced it was buying a 30 per cent stake in Equinor’s proposed Bay du Nord oil development off the coast of St. John’s, N.L., which would be the first deepwater oil project in the country.
The Canada-Newfoundland and Labrador Offshore Energy Regulator says it received 10 successful bids in total, marking the first time since 2022 that companies have purchased exploration licenses in the province.
Spokesperson Alicia Curran said it was the largest number of successful bids since 2000.
OilCo, the province’s oil and gas corporation, successfully bid on two licenses, each for an offshore parcel of more than 2,700 square kilometres.
Jim Keating is the CEO of OilCo, which successfully bid on two licenses. (Curtis Hicks/CBC)
Jim Keating, OilCo’s chief executive officer, says the idea is to partner with interested oil companies on the licenses and give them an opportunity beyond the annual call for bids to dip their toes in the province’s oil industry.
“By securing our exploration rights to these parcels, we can create alternative commercial entry points for these investors,” Keating said in an interview.
Equinor is expected to make a final decision early next year about whether it will proceed with Bay du Nord, which would be about 500 kilometres off the coast of St. John’s, in the Flemish Pass Basin.
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Torgrim Reitan, the company’s chief financial officer, told investors last week that the $14 billion development, as it is currently proposed, only involves some of Equinor’s discoveries in the area, and there are opportunities for expansion.
As it stands, Bay du Nord is expected to extract more than 400 million barrels of oil.
The Newfoundland and Labrador government has said it is considering buying a stake in the project of up to 10 per cent.
The province’s offshore area is currently home to four oil installations. Bay du Nord would be the fifth.
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