Exploration drilling is of highest importance to unlocking hydrocarbon potential offshore Newfoundland and Labrador (NL). To encourage drilling, the Provincial Government is implementing the Offshore Exploration Initiative (the “Initiative”) aimed at increased drilling of exploration wells in the Canada-Newfoundland and Labrador Offshore Area. The Initiative commenced in 2021 and continues until 2024. The Initiative will be reported upon annually and reviewed prior to the 2024 expiry.
Eligibility Period
- Exploration Licenses (“ELs”) awarded in 2020 and Previous Years until December 31, 2023;
- ELs awarded in 2021 until December 31, 2024.
Eligible Expenditures
- Only exploration wells targeting distinct geological targets – structural, stratigraphic or combination of the two – representing distinct standalone prospects are eligible. Delineation, Appraisal, or Sidetrack wells that have been drilled for geological purposes are not eligible.
- Exploration wells are only eligible for reimbursement if the exploration well reaches planned target(s) formation as agreed with the Department of Industry, Energy and Technology.
- Exploration well must be completed within one year of the Spud date to be eligible.
- The Initiative may be utilized across two adjoining exploration licenses, up to a maximum of 1,600 sections, provided that the exploration licences are held by the same operator.
Reimbursement Process
- The Initiative will reimburse eligible amounts on a quarterly basis in May, August, November and February of the following Fiscal Year, providing the Operator has submitted claim by March 31 of that year.
- Reimbursement will be calculated on an annual pro-rata basis. If the reimbursement requests in a year exceed the funding available that year, any unpaid portion will be carried forward for reimbursement in future years.
- Priority for carry forward reimbursement is based on the year that the reimbursement request was submitted.
Credit of Rebate to Acquisition Price
- If a well drilled through this Initiative results in a commercial discovery, the rebate on that well shall be credited towards the Province’s acquisition price of its up to 10 per cent equity interest.
Review
The Initiative will be reported upon annually and reviewed prior to the 2024 expiry.
Resources
For more information on this program, please access the following links:
Contact
Information pertaining to the Offshore Exploration Initiative will be populated as it becomes available.
Please directed all questions to OEI@gov.nl.ca.