September 18, 1998
(Mines and Energy)

Government pleased with results from C-NOPB Call for Bids

Charles Furey, Minister of Mines and Energy, says that he is pleased with the record results of the Canada-Newfoundland Offshore Petroleum Board's (C-NOPB) 1998 Call for Bids in the province's offshore area. The $175 million in total bids for the 1998 land sale is up from the previous high of $126 million in 1996.

"I am delighted with the results of this year's Call for Bids as it is a prime indicator of the confidence that the petroleum industry has in the province's resource potential, especially given the current low oil prices," said Furey. "While I am very pleased with today's results, I am not surprised. The potential of this area has been recognized by the industry, generally, and is reflected in the Arthur Anderson report which states 'The Canadian offshore is believed to offer the greatest potential for significant oil discoveries.'"

This year's land sale is the largest land offering ever held by the C-NOPB in the Grand Banks area. "The positive bidding results demonstrate both an optimistic future for these parcels and an expanding interest in our offshore area," said Furey.

Furey said: "I am also pleased to welcome two new players to the province's east coast offshore - PanCanadian Petroleum Limited and Tatham Offshore Canada Ltd. "The introduction of new independent players is great news for the continued growth of the industry. Participation of new players broadens the base of the industry and in turns strengthens it. It also portrays a positive message that the province's petroleum industry is quickly advancing. For those companies not yet involved in our offshore, there are still many great opportunities to participate in the continued development of our petroleum industry."

This high level of industry confidence has not occurred just as a by product of successful exploration. It also results from the combination of the development of a competitive generic offshore royalty regime and infrastructure. This is enabling the people of the province to participate and in fact expand the role they can play in this new industry," said Furey. "Overall, the results of this land sale reflects the long-term commitment the companies have in developing a world-class industry. The commitment made by these companies symbolizes a bright future for our industry. This is also a clear reflection that Newfoundland and Labrador is indeed a good place to do business."

This year's Call for Bids included 13 land parcels in the Grand Banks representing 801,053 hectares. A total of 10 land parcels received bids. The bids were evaluated solely on the total amount of money the bidder committed to spending on exploration during the first five years, the minimum bid for any parcel was $1 million.

________________________________________________________________________

BACKGROUNDER

Results from previous C-NOPB Call for Bids

• To date, 23 significant discoveries have been made in the offshore area, including five on the Labrador Shelf and 18 on the Grand Banks. For offshore Labrador, total discovered recoverable resources are 4.2 trillion cubic feet of natural gas and 123 million barrels of natural gas liquids. For the northeast Grand Banks region, total discovered recoverable resources are 1.6 billion barrels of oil, four trillion cubic feet of natural gas and 237 million barrels of natural gas liquids.

• The C-NOPB announced in October of 1995, results of its 1995 Call for Bids for offshore exploration rights in the Grand Banks area. The results of the Call were extremely encouraging. Amoco Canada's bid of $90.3 million to secure a 18,000 hectare parcel immediately northeast of the Terra Nova field is the single largest work expenditure bid ever made for an exploration licence in our offshore area. Husky Oil and Murphy Oil were also successful bidders, with a joint bid of $5.5 million for a parcel located immediately north of the Hebron field.

• In October 1996, the C-NOPB announced results of its 1996 Call for Bids for offshore exploration rights for the four parcels located on the Grand Banks and the four parcels offshore western Newfoundland. The results of the Call were extremely encouraging as $126 million in total work expenditure bids were selected for the eight parcels offered. The results from this sale are as follows:

• The 1997 Call for Bids which closed on December 4, 1997, resulted in seven parcels offered, going for a total work expenditure bid of approximately $98 million. The successful bids for 1997 are summarized below:

Media contact: Tara Laing, Communications, (709) 729-4890.

1998 09 18                                                                                     12:35 p.m.