Scheduled Land Tenure A Holistic Overview of the C-NLOPB s New Petroleum Licencing Process Craig Rowe, M. Sc., P. Geo Director of Exploration crowe@cnlopb.ca www.cnlopb.ca Twitter: @cnlopb
DISCLAIMERS MAPS: All forward looking maps (beyond 2015) are for illustrative purposes only and used to show the process of the scheduled land tenure system. The specific locations and configurations of sectors, parcels and exploration licences will depend on subsequent Calls for Nominations and Calls for Bids. UNCLOS: All interest holders of production licences containing areas beyond 200 nautical miles may be required, through legislation, regulation, licence terms and conditions, or otherwise, to make payments or contributions in order for Canada to satisfy obligations under Article 82 of the United Nations Convention on the Law of the Sea (UNCLOS). 2
Overview Introduction St. John s Assessment/Design Vancouver Calgary Halifax Implementation Ottawa Results Stavanger Opportunities Aberdeen Conclusions Newfoundland & Labrador Dublin London Halifax St. John s Paris Lisbon Madrid 3
Introduction Established by Atlantic Accord in 1985 2015 C-NLOPB Licence Information We are the regulatory agency responsible for the oversight of all petroleum related activities in the Canada-Newfoundland and Labrador Offshore Area We report to Parliament and the House of Assembly through the Federal and Provincial Ministers of Natural Resources Pillars: Worker Safety Environmental Protection Resource Management Exploration Industrial Benefits 4
Canada-Newfoundland and Labrador Offshore Area Current Offshore Basins C-NLOPB offshore area of approximately 1.8 MM km² (dashed red) Jurisdiction extends to the limit of the Continental Margin Over 20 offshore sedimentary basins Paleozoic Basins Carboniferous Basins Mesozoic Basins Offshore area larger than US Gulf of Mexico (solid purple) Norwegian Continental Shelf 5
Old System - Why Change? 30 year old licencing system Single year process Extremely short timeline for frontier regions Lack of activity in frontier basins Low levels of multi-client data acquisition Small pool of active exploration companies 5. Licence Award (January) 4. Close Call for Bids (November) 1. Open Call for Nominations (October) 3. Announcement Call for Bids (April) 2. Close Call for Nominations (November) 6
Participation Goals for a Goals for Offshore Activity New System Increase timelines allowing longer periods for geoscientific assessment Increase geophysical and geological data acquisition Increase predictability in licencing rounds Increase competitiveness in licencing rounds Increase availability of lands Increase exploration and development activity Increase number of active explorers Heightened focus on frontier acreage Increase geoscientific knowledge, especially in frontier basins Geophysical Programs Acquired Active Operators Exploration Wells Drilled 7
Operational Considerations Maintain C-NLOPB Flexibility Ensure Predictability, Integrity, and Transparency Work with Existing Legislation Review Other Jurisdictions Consult with Industry Effect on Existing Activities and Operations Potential Minimum Bids/Commitments Possible Incentives 8
Technical Considerations Sub-division of the Offshore Area Length of Rounds Amount of Land to Offer Land Configuration Options Block/Parcel Size Type of Bid System Pre-Qualifications Special Considerations 9
Guiding Principles A licence based framework Desire for industry input Would need geographic and activity based sub-divisions Licence Based System Would need different timelines for mature vs. frontier Desire to maintain simplicity where possible Subdivision of offshore area Include Operator Input Simplicity where possible 10
Scheduled Land Tenure Components Sub-division of offshore into eight Land Tenure Regions regions Separation of Mature vs. Frontier: Three Activity categories Low High Mature Longer assessment periods Three licence timing cycles: 4-year Low 2-year High 1-year Mature Multiple nomination opportunities Work commitment bid No prequalification Incentives 11
New Scheduled Land Tenure Process Call for Nominations Areas of Interest 1 st Step - Request for Industry Nominations - Areas of Interest Sector Identification 2 nd Step - Regulator Announces Sector Locations Call for Nominations - Parcels 3 rd Step - Request for Industry Nominations - Parcels within the Sector Call for Bids 4 th Step - Regulator Announces Parcel Configuration and Opens Bid Round Close of Bid Round Final Step - Successful Bidders are Selected and Publically Announced 12
Scheduled Land Tenure Implementation 2014 First introduction of new Sectors (black outline): One low activity 4 year cycle LS One high activity 2 year cycle - EN Call for Bids (red outline) 13
Scheduled Land Tenure Implementation 2014 2015 Three new sectors (black outline): Two low activity 4 year cycle LS, SEN One high activity 2 year cycle - EN Call for Bids (red outline) : First bid round in new system to close November 2015 Eastern Newfoundland Region 14
Scheduled Land Tenure Implementation 2014 2015 2016 Two new sectors (black outline): Two low activity 4 year cycle LN, SEN Call for Bids (red outline): Second bid round to close in Eastern Newfoundland For Illustrative Purpose Only 15
Scheduled Land Tenure Implementation 2014 2015 2016 2017 Three new sectors (black outline): Two low activity 4 year cycle WNL, NEN One high activity 2 year cycle - EN Call for Bids (red outline): Third round to close in Eastern Newfoundland First round to close over a low activity sector - LS 16 For Illustrative Purpose Only
Scheduled Land Tenure Activity 2014 Actual - <8% under licence/open bid/sector 2017 Possible - >20% under licence/open bid/sector 17 For Illustrative Purpose Only
Preliminary Results 2014-2015 Multi-Client Data Acquisition Have received positive feedback Observed a substantial increase in multi-client geophysical data acquisition Strong participation in the nomination process November 2014 set a new record for a single Exploration Licence bid amount of $559 million (CAD) 18
2015 and Beyond First major bid round to close November 12, 2015 Expect increased international interest Continued increase in multi-client data acquisition Growth of exploratory drilling Continued, predictable licencing rounds Realistic results Access to extensive offshore acreage 2015 Call for Bids 19
Conclusions Difficult to find a one size fits all solution C-NLOPB model is effective in a growing or underdeveloped jurisdiction Example of a world class petroleum licencing model C-NLOPB system offers: Extensive predictability with licencing opportunities ongoing for the foreseeable future. Direct opportunity for industry input via the nomination processes 20
Thank-you! Website: www.cnlopb.ca Twitter: @cnlopb Information requests: information@cnlopb.ca 21