In an announcement last week, the Canada-Nova Scotia
Offshore Petroleum Board ("CNSOPB") has
issued Call for Bids NS16-1 for Exploration Licences consisting of
six (6) parcels of the coast of Nova Scotia. Three parcels are
located in shallow water on the Scotian Shelf, south of Sable
Island and are adjacent to current natural gas production from the
Sable Offshore Energy Project. The remaining three are located
further south of the first three on the outer shelf and slope of
the central Scotian margin. As per the CNSOPB, exploration wells on
two of the six parcels, namely parcels 1 and 4, have encountered
significant quantities of natural gas in the past.
Two of the six parcels up for bidding have been nominated
by the E&P industry which, amid the down-turn in global oil
prices, is a testament to the potential this region has in
attracting investment. It is anticipated that the bids received in
response to NS16-1 will augment further more than $2 billion work
commitments of BP, Shell, and Statoil that have been made since
Petroleum Rights and Term
Successful bidders will be awarded Exploration Licences
pursuant to the Canada-Nova Scotia Offshore Petroleum Resources
Accord Implementation Act, S.C. 1988, c. 28, and the
Canada-Nova Scotia Offshore Petroleum Resources Accord
Implementation (Nova Scotia) Act, S.N.S. 1987, c. 3. The total
term for an Exploration License will be for a period of 9 years
divided into two phases i.e. Period One- 6 years and Period Two-3
years or the balance remaining out of the total of 9 years in case
there is an extension granted in Phase One.
Important Considerations for Bidders
Some of the most important consideration for bidders
Deadline for submission of Bids:4:00 p.m. Atlantic Time on October 27th, 2016
criterion to be used for evaluating bids is the total amount of
money proposed to be spent on exploration activity in the parcel
within Period One with minimum bid requirement of CAD$ 1 million
("Work Expenditure Bid").
Bid Deposit:A bid deposit
of CAD $10,000 must be submitted to CNSOPB with every
Requirements:Submission of bids for parcels
4,5 and 6 which are in deeper waters require bidders to exhibit
previous operating experience in waters beyond 800 meter
Work Deposit:In the event
of a successful bid, the bidder is required to make a Work Deposit
of 25% of the Work Expenditure Bid within 30 days of being notified
that its bid was successful.
ESRF Levy:Upon issuance of
the Exploration Licence, the successful bidder must pay
Environmental Studies Research Fund
("ESRF") levies under the Canada
Petroleum Resources Act, R.S.C. 1985, for the year in which
the licence is issued and retroactive levies for the two preceding
years. The ESRF levy is administered by a separate board known as
the Environmental Studies Management Board ("ESM
Board") and is levied under the Canada Petroleum
Resources Act, R.S.C. 1985. The ESRF levy is to be paid into
an account designated by the ESM Board for a particular region.
ESRF levy is determined by multiplying the number of hectares of
land included in the licence by the ESRF rate for the applicable
region determined and stipulated by the ESM Board.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
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