Shell bets on Nova Scotia’s offshore

By Darren Campbell

January 23, 2012

Nova Scotians are used to economic disappointment. Despite its reputation as the most vibrant (business-wise) of the four Atlantic provinces (faint praise indeed), Canada’s Ocean Playground suffers from all the problems you would expect from an econ0mic backwater – high unemployment, bad roads and everyone in the 20-30 demographic leaving the province to work in Fort McMurray.

In recent years that disappointment has extended to its offshore oil and gas industry, as Calgary has shunned Nova Scotia due to high costs and disappointing drilling results. In the most recent call for bids issued by the Canada-Nova Scotia Offshore Petroleum Board, not a single dollar was spent on any leases when the results were announced in July of 2010. You have to go back to 2001 to find a year when the industry bid at least $500 million for the right to explore for hydrocarbons off the coast of Nova Scotia.

Thus, it’s noteworthy that the board announced on Friday that Shell Canada Limited has committed $970 million for the rights to four offshore parcels. It’s the highest amount ever received for a call for bids in Nova Scotia’s offshore.

Why the about face from at least one industry player? It might have something to do with recent work done to reassess the offshore petroleum potential of Nova Scotia. The work – a partnership between Nova Scotia’s Department of Energy, Dalhousie University and St. Mary’s University – determined that Nova Scotia’s offshore had 122 trillion cubic feet of natural gas and 8.1 billion barrels of oil in place. That’s quite a step up from the estimates the offshore petroleum board previously touted. During an interview last summer with Alberta Oil, Sandy MacMullin, executive director of Nova Scotia’s Department of Energy’s petroleum resources division said of the new analysis:

Inside the department we are excited about this. What Big Oil wants to see is the ‘What’s new?’ story. We think this is a new story.

With the price of oil remaining in the US$100 stratosphere, Shell Canada agreed. The activity may not reach the heights it has in neighboring Newfoundland and Labrador, but at least hope has returned to Nova Scotia’s offshore and the people who hope to earn a living from it.