Nalcor Energy wasn’t planning to spend money on new seismic data collection for oil and gas exploration off Newfoundland and Labrador this year.
The Liberal cabinet stepped in, ordering a $20-million change in plans.
“Nalcor’s board of directors made a decision not to invest in exploration in 2018. Considering Advance 2030, support from the oil and gas community for the exploration program, and to provide required information to investors for future license rounds, government directed Nalcor’s board of directors to reinstate and invest $20 million in new data collection this year,” said Natural Resources Minister Siobhan Coady, in an emailed response to questions this week.
In addition to new data, $8 million is being spent on analyzing the final data from work completed in 2017.
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Information gleaned from the seismic data and even the raw data is ultimately used to spur private interest in the province’s offshore oil and gas potential.
On Monday in the House of Assembly, the Progressive Conservatives were questioning the minister on a year-over-year drop in spending on the seismic data program.
While the total $28 million spend now in the budget is lower than last year, it is higher than what was spent in 2011 through 2014, not far off the spend on the program in 2015.
It is also far more than what the corporation’s board of directors was considering.
“As with all other crown corporations, departments, and agencies of government, Nalcor Energy was asked to find ways to reduce its operating costs in its 2018 budget. The 2018 seismic program was one of the areas identified by management and approved by the board of Nalcor as a means to achieve these budget reductions,” said Nalcor Energy board chair Brendan Paddick in a statement. “Government directed Nalcor to continue the seismic program in 2018 with a $20-million budget in support of Advance 2030. Nalcor’s oil and gas subsidiary is pleased to continue with its seismic program.”
The seismic spend is funded through Nalcor Oil and Gas revenues.
Overall, the corporation has been able to offset spending on the data collection through data sales and third-party agreements, recovering $46.2 million from 2011 to the end of 2017.
In her responses to questions in the House, Coady noted 3-D seismic data is more expensive to collect and interpret than 2-D data.
This year, the plan is to complete work in the areas up for bids in the 2019 and 2020 license rounds.
The Order in Council relating to the $20 million was issued March 27 — provincial budget day.
On the same day, the government was being questioned about a decision to split Nalcor Oil and Gas from the rest of Nalcor Energy, to create a new Crown corporation. That move will require legislative changes to complete.
Following budget day, The Telegram requested an interview with Nalcor Oil and Gas lead Jim Keating about the change. No interviews have been granted with Keating on the subject to date, with work on the change being in the early stages.
Nalcor Energy’s annual general meeting will be held today (Thursday) at the Holiday Inn in St. John’s. A webcast will be available at 10:30 a.m. NST at nalcorenergy.com.
Nalcor Oil and Gas seismic budget
The amount paid by Nalcor Oil and Gas for its seismic data program, by year. Dollar amounts include new data collection and final data delivery from previous year.
2011 — $3.4 million
2012 — $8.5 million
2013 — $9.5 million
2014 — $13.9 million
2015 — $28.6 million
2016 — $29.6 million
2017 — $37.9 million
2018 — $28 million
(Source: Nalcor Oil and Gas, email April 17, 2018)