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Scotian Regulatory Changes Amenable to Producers
To increase drilling and knock down barriers to exploration and production, Nova Scotia Minister of Energy Cecil P. Clarke said Tuesday that the province has improved its regulatory processes to collect more royalties and impose fewer penalties.
Clarke, speaking at the Offshore Technology Conference in Houston, said the province changed its rights issuance process after conferring with producers. The policy had penalized leaseholders if they did not meet work commitments for their offshore blocks, as defined by the province.
The minister said the penalties were assessed “even if experience shows it would be better to drill another block.” Clarke said the former policy benefited neither the province nor the producer.
“We want to collect royalties, not penalties,” said Clarke, because “everyone wants wells drilled and discoveries made.”
The value of work commitments on a lease block will remain the same, he said, but now spending by the oil and gas company would be targeted toward prospects that “hold the most promise,” he said.
The new approach came about after government officials met with producers to determine if another approach might lead to more wells, especially in deep waters. So far, Clarke said the response has been positive. He said the province wanted to respond to producers’ requests for a regulatory system “in which they can reasonably anticipate costs” and one that put the emphasis on performance and results.
The province signed a memorandum of understanding earlier this year to allow leasehold applicants to file only one set of documents for new offshore development. All of the regulatory reviews now happen concurrently, said Clarke. Large developments take about nine to 13 months for approval, while it may take only six months if the exploration is planned in an “area with few sensitivities…ties to existing infrastructure.” The Sable Offshore Energy Project took about 16 months for approval, he said.
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