Acknowledging that Nova Scotia has work to do if its waters are to ever be considered a world class attraction for exploration and production companies, the regulator of the province's offshore petroleum industry announced changes to make the region more enticing.

In a speech Thursday to members of the oil and gas industry, the chair of the Canada-Nova Scotia Offshore Petroleum Board, Diana Dalton, introduced more flexible terms and conditions for new exploration licenses. And while noting that offshore petroleum royalties that are projected to reach C$420 million in 2007-2008 are "not to be sniffed at," she allowed that the region has seen a downturn in exploration activity that needs to be reversed.

"[T]here's no doubt that the Nova Scotia offshore is experiencing a downturn in exploration," Dalton said. "But rather than seeing this from a doom and gloom vantage point, we need to recognize the cyclical nature of the industry. We at the board are confident in our geological assessments which point to excellent hydrocarbon potential in several areas. As energy prices continue to climb, we believe Nova Scotia will move into an increasingly favorable position."

In the future, there will be a second type of exploration license with a term of two or three years and with a lower cost of entry, Dalton told a business audience at a breakfast hosted by the Offshore Onshore Technology Association of Nova Scotia. This type of license will appeal to a broader range of oil and gas companies allowing them to do preliminary work without up-front, long-term commitments.

"The changes we have announced today will make the offshore of Nova Scotia more attractive for exploration," she said.

Dalton also said that in the future the board will appraise and evaluate data on areas thought to have potential for oil and gas. The board will package the information and announce that the area is open for exploration through a competitive call for bids at regular intervals.

"We want the offshore of Nova Scotia to be regarded as a part of the global industry, not apart from it," Dalton said, noting that the changes follow broad consultation and consideration of best practices worldwide. Dalton also gave details of a state-of-the-art data management system that will be fully operational in October.

"We believe the changes we've announced today will get explorers exploring at minimal cost and provide valuable geoscience information on the offshore," she said. "We must recognize that when it comes to exploration in the global oil and gas industry, Nova Scotia is truly a new frontier."

In February, EnCana Corp. said it pulled back on its exploration activities in eastern Canada because of limited success, but CEO Randy Eresman said at the time the company remains committed to developing the gas reserves in the Deep Panuke field offshore Nova Scotia (see Daily GPI, Feb. 20).

Less promising is the Sable Offshore Energy Project, whose operators in 1998 boasted possible production rates as high as 500 MMcf/d (see Daily GPI, Feb. 13, 1998). The project is now in "terminal" decline, according to a study released last year (see Daily GPI, Jan. 10, 2006).

The Canada-Nova Scotia Offshore Petroleum Board is a joint agency of the governments of Canada and Nova Scotia. The board regulates petroleum activities in the offshore Nova Scotia.

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