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Commodity Pricing

Many Reasons for Optimism

My last blog focused on moving forward together. Building upon that important theme, this month I would like to focus on some of the good things happening in our offshore that will benefit the industry for years to come.

After months of disheartening announcements about delays, cancellations, and general upheaval, it is encouraging to see things turning a corner and some positive announcements happening.

On April 8th, the C-NLOPB issued a news release confirming the 2021 Call for Bids in the Labrador South Region, consisting of 10 parcels and a total of 2,294,340 hectares. The Call for Bids is expected to close when the Labrador Shelf Offshore Area Strategic Environmental Assessment (SEA) update has concluded, sometime before the end of the calendar year. While this will be the only Call for Bids in 2021, the potential for the Labrador offshore is compelling and I am excited for the opportunity it presents for our industry, Noia members, and residents of Labrador.

In mid-April, the Stena Forth exploration vessel was spotted resting off the coast of Bay Bulls. The Stena Forth has embarked upon CNOOC’s exploration program to drill in the Flemish Pass. While CNOOC may be the only company set to drill offshore this year, their Pelles well has been noted by two separate international industry publications as being among the 20 key wells to watch globally. On April 27, the C-NLOPB announced it had issued a Drilling Operations Authorization to CNOOC Petroleum North America ULC, to enable exploration drilling to commence in the Canada-NL Offshore area. We will keep a very close eye on the outcomes of this exciting drilling activity.

With the proposed Central Ridge exploration program approved by the federal government and St. John’s named Canadian HQ, Equinor has shown a dedication to the Newfoundland and Labrador offshore. In October 2020 they announced that hydrocarbons were discovered at the Cappahayden and Cambriol wells, and a top-hole was drilled at the Sitka prospect. That same month Equinor was awarded a Significant Discovery License (SDL) for the Harpoon well, which later in January had its reserve updated to 40 million barrels by the C-NLOPB. And just recently, Fugro was selected to conduct seabed and environmental surveys and soil investigation in the Flemish Pass this summer. The Bay du Nord discovery has an estimated 407 million barrels of recoverable oil, which – when all combined – makes for a very encouraging development prospect. We are all hopeful for a positive announcement from Equinor on the Bay du Nord project and the many benefits that it will bring the service and supply sector and our entire province.

While just recently Suncor Energy released expressions of interested related to the Terra Nova field, including potential decommissioning of the FPSO and field abandonment, I encourage all parties to remain at the negotiating table and achieve a deal that is in the best interest of our offshore oil and gas industry and our province. Terra Nova has provided Noia members and the province with so many benefits and the asset life extension project could provide another decade of exceptional work and thousands of jobs. I want to see Noia members pursuing EOIs related to the asset life extension project of the Terra Nova FPSO and the many spinoff opportunities associated with the project for years to come.

Putting the full picture of our industry in context with the many good things that are still occurring, along with a recovering price of oil, increasing vaccinations, and growing demand, I am hopeful the worst for the industry is now behind us. With that said, we must continue to collaborate and work together, finding innovative ways to build back our industry even stronger than before. We have the resources; we have the experience; and we certainly have the talent. There are countless reasons for optimism and I whole-heartedly believe our best is yet to come.