Like Alberta, Newfoundland and Labrador’s petro-economy is suffering the effects of a prolonged decline in oil prices. But even as the East Coast province bottoms out, there are signs that a positive turnaround in fortunes is in the offing, led once again by the offshore oil sector.

In November, the Newfoundland and Labrador Offshore Petroleum Board released the results of its annual exploration rights sale: a record $1.2 billion was pledged on seven offshore parcels, all of them located on the edge of the continental shelf in the deepwater Flemish Pass.

Led by Norway-based Statoil ASA, participants in the winning bids include St. John’s-based ExxonMobil Canada Ltd. and Calgary-based Chevron Canada Resources Ltd., veteran players on Canada’s East Coast offshore. They are joined by newcomers China-based Nexen Inc., Calgary-based BP Canada Energy Group ULC, and U.K.-based BG International Ltd.

These new entrants are evidence of quickening momentum in the Flemish Pass Basin, which is home to at least two proven oilfields that are controlled by Statoil. In 2013, that company disclosed that the Bay du Nord field in the basin holds 300 million to 600 million barrels of recoverable oil, while the Mizzen field has 100 million to 200 million barrels.

This revelation was followed in December 2014 with a record bid in the East Coast offshore oil industry, as an international consortium committed $559 million for a single parcel of land in the Flemish Pass. According to the terms of the nine-year lease, at least one well must be drilled in that period of time by the group, which includes ExxonMobil, Calgary-based Suncor Energy Inc. and Houston-based ConocoPhillips Co..

A note of caution about the new exploration is necessary, as Newfoundland and Labrador’s offshore oil industry has seen significant exploration expenditures come to nothing. In 2003, $672 million was bid on 14 parcels in the Orphan Basin, with Chevron taking the lead – and also absorbing most of the losses as exploration activity came to nothing.

The difference this time, however, is that, thanks to Statoil’s success, the Flemish Pass is a proven frontier for oil and gas producers. Now, the world’s largest players have taken notice.

An assessment of geoscience data on the Flemish Pass in areas covered by the 2015 land sale, conducted by the French company Beicep-Franlab, found the potential for 12 billion barrels of oil and 113 trillion cubic feet of natural gas. The survey was completed at the behest of Nalcor Energy, the province’s energy Crown corporation.

If oil reserve projections come to fruition, they would transform the relatively minor eastern Canada offshore industry into a world player, on par with the now mature North Sea oil industry.

Currently, there are three operating oil installations off the coast of Newfoundland, all of them in the Jeanne d’Arc Basin. They will be joined by a fourth in 2017, when the Hebron production platform begins production.

While Flemish Pass exploration is positive news, the province may have to wait many years before production begins there. The world is awash in oil, and resources contained in new frontiers such as this are being treated like a savings account – to be exploited only when conditions are right. IE

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