NOVA SCOTIA CANADA: THE NEXT PLAY

Canadian Association of Petroleum Producers positive about offshore potential

World Oil magazine talked with Canadian Association of Petroleum Producers (CAPP) Vice-President Brian Maynard about the potential and challenges of offshore Nova Scotia.

Question: What does CAPP think is positive about Nova Scotia’s offshore prospects?

Answer: The fact that commercial quantities of hydrocarbons have been discovered offshore NS and that two projects (Cohasset-Panuke and Sable) have been brought to production with a third (Deep Panuke) coming closer to development. These facts point to an offshore with high-quality hydrocarbons and the potential for future discoveries.

CAPP Vice-President Brian Maynard

There are some challenges in understanding the geology to find more oil or gas. However, owing to the efforts of the Nova Scotia government and the Canada-Nova Scotia Offshore Petroleum Board (CNSOPB) and some industry players who are doing analysis in this area, the industry remains positive about Nova Scotia’s future offshore potential.

Q: How would CAPP describe the Canada-Nova Scotia Offshore Petroleum Board’s (CNSOPB’s) strategic new direction to reinvigorate exploration activity?

A: They are positive. The Board is examining changes in the land tenure system to encourage future exploration activity. How these changes will be put into practice is still being discussed.We have had extensive discussions with the CNSOPB on their land tenure policy changes and are beginning discussions around the new license terms. Further details of the license terms and conditions still remain to be discussed, but industry views the approach as positive, as these types of licenses have worked in other offshore jurisdictions, like the UK.

Alone, these changes will not bring immediate exploration back to the Nova Scotia offshore. But when the changes are coupled with other initiatives of the provincial government, Nova Scotia’s offshore is undeniably a more attractive place for investment.

Q: What measure do you think is most attractive in promoting exploration?

A: The biggest challenge is the challenging geology. The CNSOPB has indicated its intention to be more proactive in the coming years with regard to resource assessment, to better understand the offshore geology and share that information. We strongly encourage the Board to move forward with this process in the hopes of overcoming some of the geological challenges the area faces. In June 2006, the board completed a geological and geophysical re-assessment of the Scotian slope. A public report is being prepared for release, and industry would be interested in reviewing the results.

Q: What will it take for offshore Nova Scotia to be recognized as a world class basin?

A: While having the Deep Panuke project proceed will be viewed favorably by the global business community, it will take additional exploration activity with more discoveries to get recognition as a world class basin.

Q: What is the provincial government doing that is right?

A: The provincial government has invested nearly $1 million in geoscience research and nearly $6 million in research and development and data initiatives. The government is also doing a good job of promoting Nova Scotia as a good place to do business, and showing that they are willing to work with industry to improve policies and programs related to boosting exploration activity and creating an efficient and effective regulatory environment

Q: What is your opinion of the “ground rules” in Nova Scotia?

A: The industry looks for certainty and stability in the regulatory environment. In addition to that, the regulatory environment has to be competitive internationally. The “rules” in Nova Scotia are well known and stable. While there have been some areas of inefficiency identified by industry, governments have been, and continue to be, very open to working with industry to address those concerns.

Q: Which basins show the most promise in your opinion?

A: The deepwater area of the Sable Basin is regarded as having the most promise.

Q: How will Deep Panuke impact the local industry?

A: The supply and service community in Nova Scotia will feel the effects of Deep Panuke with engineering, design and fabrication work to be completed in the province and over 1.35 million person hours of guaranteed work in Nova Scotia. In the longer-term, the hope would be that the success we have seen with respect to the review of Deep Panuke will lead to greater industry interests and investment.