Warren R. True
Chief Technology Editor-LNG/Gas Processing
HOUSTON, May 3 -- Nova Scotia's Minister of Energy Cecil P. Clarke announced at the Offshore Technology Conference a "major shift" in regulatory approach to address complaints by operators that the province "had created barriers to exploration."
Referring to the province's "rights issuance" process, Clark announced a change in the former policy, which penalized license holders if they had not met work commitments on a specific block. This penalty was assessed, he said, "even if experience shows it would be better to drill on another block." He said that outcome benefited no one.
"Everyone wants wells drilled and discoveries made," he said. "We want to collect royalties, not penalties."
He said existing legislation allows consolidation of licenses to help ensure wells are drilled "in the right places."
Under the new process, the overall value of work commitments remains the same, but spending will now be "targeted at prospects that hold the most promise."
Clarke said Nova Scotian regulators have been discussing the new approach with license holders to see if the approach would lead to more wells being drilled, "especially in deep water." The response, he said, has been affirmative.
The provincial budget, published earlier this month, increased funding for the Department of Energy to "develop better ways to share information on our offshore prospects."
Clarke also said the province is responding to operators' calls for a regime "in which they can reasonably anticipate costs and approval times."
Responding to industry's call for the regulations to stress performance and results, Nova Scotia and other governments involved in Canada's offshore are renewing offshore regulations "to ensure they meet modern technical standards and worldwide best practices."
Under a memorandum of understanding signed in February, an applicant must file only one set of documents for a new offshore development, and all "regulatory reviews will happen at the same time."
Approval times for large, stand-alone developments can now run only 9-13 months, Clarke said, maybe 6 months "if the project proposal includes established technologies, in an area with few sensitivities, with ties to existing infrastructure." Sable project approval, he noted, required 16 months.
Governments, he said, have recently completed a public comment period on a new code of practice for seismic operations. The code will "standardize seismic approval and mitigation across Canada" and be consistent with North Sea and Gulf of Mexico requirements.
