Through the Offshore Exploration Initiative the Provincial Government today announced its continued support for oil and gas exploration in the province through support for ExxonMobil Canada’s newest exploration well, Gale N-66.
Newfoundland and Labrador’s oil and gas industry – with low emissions per barrel compared to the international average and our strong environmental, social and governance structure – can be a part of the solution as the world transitions to a lower carbon economy.
This is ExxonMobil’s third frontier exploration well within ExxonMobil’s multi-year exploration program. The Gale prospect is located beyond the northern edge of the Jeanne d’Arc basin in the Central Ridge. The well is designed to test the reservoir and hydrocarbon potential of the area. Drilling is anticipated to begin in 2023.
Annually, the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) issues calls for bids for exploration licences in the province’s offshore. The sole criterion for selecting a winning bid is the total amount of money the bidder commits to spend on exploration of the parcel. The successful bidder is required to post a security deposit for 25 per cent of the work expenditure bid. If the bidder does not meet its work commitment, some or all of the security deposit may be forfeited in which case the investment opportunity would be lost.
The Offshore Exploration Initiative allows bid deposit forfeitures to be reinvested as received, resulting in a potential injection of hundreds of millions of dollars in support of growth in the province’s offshore petroleum industry. By funding a percentage of well costs beyond the first well drilled, the Provincial Government ensures that those funds are reinvested back into the offshore with maximum effect to yield those high impact discoveries that create our future projects.
Under the Offshore Exploration Initiative there will be no cost reimbursement for the first well drilled. The second and third wells will receive cost reimbursement respectively up to a maximum of $30 and $50 million. This makes it more likely that a third well will be drilled and increases the chances of a discovery. It also allows licence owners to potentially test another structure within a given area, further improving the odds of a discovery.
Through the province’s Offshore Exploration Initiative, ExxonMobil is eligible to receive reimbursement for the costs of its second well (Hampden) up to a maximum of $30 million. The company’s third well (Gale) is eligible to receive up to a maximum of $50 million.
Exploration drilling is of key importance to unlocking hydrocarbon potential offshore Newfoundland and Labrador. The Provincial Government implemented the Offshore Exploration Initiative in 2021 to increase exploration of low carbon oil in the Canada-Newfoundland and Labrador Offshore Area.
Last year the Provincial Government launched its Renewable Energy Plan that contains short, medium and long term actions. The plan supports Newfoundland and Labrador’s transition to a low-carbon economy, creates employment opportunities for the province’s residents, and further positions the province as a clean energy centre of excellence.
The plan explores pathways currently available on the province’s journey towards net zero, including prospective renewable energy projects such as hydro and wind; digitalization; electrification; low-carbon hydrogen production, emissions reduction and process improvements in existing industries like oil and gas and carbon capture, utilization and storage.
In May 2020, the Provincial Government committed to net zero emissions by 2050. Newfoundland and Labrador fully supports protecting the environment, reducing carbon emissions and achieving net zero by 2050.
Quotes
“The offshore exploration initiative has provided an incentive which supports near term drilling activity and employment. We continue to support the oil and gas industry during this time of transition.”
Honourable Andrew Parsons
Minister of Industry, Energy and Technology
“ExxonMobil Canada Ltd. is evaluating drilling an exploration well in 2023; the province’s Offshore Exploration Initiative is an important consideration in our decision making. We appreciate the province’s continued support for oil and gas exploration.”
Lazaro Cosma
President ExxonMobil Canada
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Media contacts
Kelly-Anne Roberts
Industry, Energy and Technology
709-729-5248, 327-7005
kelly-anneroberts@gov.nl.ca
Margot Bruce-O’Connell
ExxonMobil Canada
709-746-8383
margot.p.bruce-o’connell@exxonmobil.com