Ottawa, Nova Scotia veto $1.5-million offshore oil exploration bid by company

The jack-up rig Noble Regina Allen sits on the heavy-lift vessel GPO Amethyst in Halifax harbour on Tuesday, Sept. 8, 2020. THE CANADIAN PRESS/Andrew Vaughan

HALIFAX -

The denial of a $1.5-million bid to relaunch oil and gas exploration in waters off Nova Scotia doesn't necessarily mean there won't be future projects, says federal Natural Resources Minister Jonathan Wilkinson.

However, the minister said in an interview Tuesday that a joint decision with Nova Scotia to veto an exploration licence approved by the Canada-Nova Scotia Offshore Petroleum Board signals the threshold for significant oil and gas development is now higher, given the global fight against climate change.

"It doesn't mean that there will never be approvals, but it is incumbent on us to be assessing these projects and ensuring that they are good from a broad public policy perspective," Wilkinson said.

He added that there is currently no thought to instituting a ban on all offshore oil and gas development.

"I think the market will actually decide those issues" Wilkinson said. "At this stage we have no intention of moving ahead with any kind of moratorium."

The board's licence approval issued to Inceptio Limited in October was for a shallow-water parcel on the Sable Bank of the Scotian Shelf. However, the bid was subject to the approval of the federal and provincial ministers of natural resources, who ruled against it in a decision released late Monday.

Had it been approved, Inceptio's bid would have renewed oil and gas exploration efforts off Nova Scotia. In 2018, production was permanently shut down at ExxonMobil's Sable Offshore Energy Project and at Encana's Deep Panuke project, which were the province's only producing offshore natural gas fields.

The ministerial decision came after Wilkinson suspended the licence on Nov. 2 to consider more information. He said the desire to develop renewable alternatives, environmental concerns and the financial size of the bid were factors in making the final determination.

"The bid that came in was a very small bid," said Wilkinson. "That raises questions about the level of risk and the level of complexity you are willing to introduce for what is a very small amount of money."

A coalition of environmental and community groups applauded the decision on Tuesday. Gretchen Fitzgerald of the Sierra Club Foundation called the ministerial veto "a really wise decision by our elected leaders."

"This is a really important moment, and we think it indicates the big shift that's going to be happening in Atlantic Canada to meet climate change head-on," Fitzgerald said.

The Sierra Club, along with the Ecology Action Centre, the East Coast Environmental Law Association and the Offshore Alliance had warned that seismic blasting and drilling between Sable Island and the Gully Marine Protected Area could affect marine life, such as northern bottlenose whales. They also called for a consistent approach to climate change, as many jurisdictions have pledged to reduce the use of fossil fuels, such as oil and coal.

"The science is very clear that new oil and gas is not consistent with a safe climate," Fitzgerald said.

Wilkinson and his Nova Scotia counterpart Tory Rushton said that as part of Monday's decision, they are establishing a joint regulatory regime for offshore renewable energy by expanding the Canada-Nova Scotia Offshore Petroleum Board's mandate.

In September 2022, the board issued a call for bids on eight offshore parcels and received just two; it approved one of them. At $1.5 million, Inceptio's bid was small by industry standards and represented the amount of money it intended to spend during the initial six years of the nine-year exploration licence.

The board said Tuesday that the company's bid deposit would be returned and the offshore parcel would remain Crown land. In an email, the board said it "continues to serve as the regulator for oil and gas activities in the Canada-Nova Scotia offshore area and is actively preparing for the expansion of our mandate to become the Canada-Nova Scotia Offshore Energy Regulator."

This report by The Canadian Press was first published Dec. 5, 2023.

For more Nova Scotia news visit our dedicated provincial page.