Please see below for an update on BP Canada (BP) Consolidated Exploration Licence 2434R.
All exploration licences (EL) have a maximum term of nine years, consisting of two periods referred to as Period 1 and Period 2. Period 1 is six years from the effective date of the EL. Period 2 immediately follows Period 1 and consists of the balance of the nine year term of the EL. At the end of Period 2, if there are no Significant Discoveries declared that result in the issuance of Significant Discovery Licence(s), the lands as defined in the EL revert to Crown.
Period 1 of BP Canada’s consolidated EL 2434R was scheduled to end on January 14, 2019.
What does this mean?
In order to validate the EL for Period 2 (January 14, 2019 to January 14, 2022), BP had to drill four wells within Period 1. If they did not drill four wells, there were options outlined in the terms and conditions of the consolidated EL agreement.
To date, BP has only drilled one well which means they had to select one of the following options as outlined in the terms and conditions of the consolidated EL agreement:
Surrendering 75% of lands and moving into Period 2 for the EL with 25% of the original land.
Surrendering 50% of lands and paying one drilling deposit to extend Period 1 for one year (keeping 50% of original lands).
Surrendering 25% of lands and paying two drilling deposits to extend Period 1 for one year (keeping 75% of original lands).
Paying three drilling deposits to extend Period 1 for one year (keeping 100% of original lands).
BP has notified the CNSOPB that it is surrendering 50% of lands and will pay one drilling deposit ($1 million) to extend Period 1 for one year (to January 14, 2020).
What does this mean moving forward?
If BP decides to drill another well during the Period 1 extension, they will need to apply to the CNSOPB for authorization. Should the CNSOPB receive an application, an update will be posted on our website here.
If BP decides not to drill another well during the Period 1 extension, they would have to select one of the following options as outlined in the terms and conditions of the consolidated EL agreement:
- Forfeit the drilling deposit paid and pay a further drilling deposit ($2 million) to extend Period 1 for an additional year.
- Forfeit the drilling deposit paid and surrender 50% of the remaining lands. The EL would then move into Period 2.
At any time, an EL holder can submit a partial or full surrender of lands.
Further updates will be provided as they become available.
For further information, please contact:
Canada-Nova Scotia Offshore Petroleum Board
1791 Barrington Street
8th Floor TD Centre
Halifax, NS B3J 3K9