East coast ‘renaissance’: Oil producers flock to area, committing $1.2B in parcels after law change

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The government is adding 13 new parcels in an auction set for this November, as the removal of a decades-old shipping restriction opened the area to more vessels seeking oil and natural gas.

A change to an obscure shipping law is helping draw major oil companies to an area off Canada’s east coast that may rival the North Sea for its production potential.

Exxon Mobil, Chevron, Statoil, BG Group and BP are among the companies that committed to spend $1.2 billion in auctions last November by the province of Newfoundland and Labrador for seven parcels off the coast. Now the government is adding 13 new parcels in an auction set for this November, as the removal of a decades-old shipping restriction opened the area to more vessels seeking oil and natural gas.

In the past, the sole domestic seismic ship used to locate potential oil deposits was operated by a Canadian company, Geophysical Services Inc., or GSI. That’s because the nation’s maritime law gave domestic businesses the ability to block the use of foreign-owned vessels.

That barrier was removed in 2012, and since then a small squadron of ships has been collecting offshore data on more than 82,000 square kilometres in partnership with the regional government. That data, available to companies in the next auction, more than doubles the area for exploration. Last year, five ships were collecting data off the province’s coast.

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