Offshore Newfoundland Exploration Calls for Bids

Summary#

The Canada–Newfoundland and Labrador Offshore Petroleum Board issued two calls for bids for offshore oil and gas exploration. The two notices invite bids on 28 parcels (NL23‑CFB01) and 19 parcels (NL23‑CFB02) off Newfoundland and Labrador, with a closing date of November 1, 2023.

What it does#

• Opens bidding for offshore parcels under the Canada–Newfoundland and Labrador Atlantic Accord Implementation Act.
• Offers 28 parcels in Eastern Newfoundland (NL23‑CFB01) and 19 parcels in South Eastern Newfoundland (NL23‑CFB02). Detailed maps and parcel descriptions are on the Board’s website.
• Sets the selection rule: the winner is the bidder who promises the largest total spend on exploration plus research, development, education and training in the first licence period (the “Work Expenditure Bid”).
• Requires a minimum Work Expenditure Bid of $10 million per parcel.
• Requires a bid deposit of $10,000 (bank draft or certified cheque) with each bid.
• Requires the successful bidder to post a Security Deposit equal to 25% of the Work Expenditure Bid within 15 days of being told they won (via promissory note plus bank guarantee or letter of credit).
• Allows claimable expenditures from the date of the call announcement up to the licence start date (these credits are additional to credits during the licence term).
• Sets licence timing:
  • Period I: six years (can be extended).
  • Period II: follows Period I and completes the original nine‑year term.
• Permits up to three one‑year extensions of Period I if the bidder posts escalating drilling deposits:
  • Period I A — CAD 5 million
  • Period I B — CAD 10 million
  • Period I C — CAD 15 million
  • A drilling deposit is refunded if the required well commitment is met during that extension; otherwise it is forfeited.
• Requires that one exploration well be started in Period I and pursued diligently.
• Applies rentals only during Period II at these rates per hectare:
  • 1st year — $5.00 per hectare
  • 2nd year — $10.00 per hectare
  • 3rd year — $15.00 per hectare
  • Rentals can be refunded up to 100% in a year based on allowable expenditures, and carry‑forward rules can reduce future rentals.
• Says parcels may be subject to issuance fees and the Environmental Studies Research Fund levies.
• Notes that parcels located entirely or partly beyond Canada’s 200 nautical mile limit may face extra terms because of obligations under the United Nations Convention on the Law of the Sea (article 82).
• Requires successful bidders to follow the Board’s Exploration Benefits Plan Guidelines on procurement, employment and reporting.
• Makes clear the Board does not have to accept any bid.

Who's affected#

• Companies that explore for offshore oil and gas and their investors.
• Contractors and service companies that supply drilling, marine, environmental and technical work.
• Businesses and workers in Newfoundland and Labrador who could win contracts or jobs under the Board’s benefits rules.
• Potentially affected communities near the offshore areas; the notice does not name specific communities or Indigenous groups.

Why it matters#

• Winning bids will lead to new offshore exploration activity and possibly new drilling. That can create local contracts and jobs, but also raises environmental and marine-use concerns.
• The $10 million minimum and the 25% security requirement mean bidders must make large financial commitments up front.
• Parcels beyond 200 nautical miles could trigger extra legal or regulatory conditions because of international law, which may affect how the licences work.
• The Board’s Exploration Benefits Plan requirements and levies mean the process links commercial activity to local procurement, training and research funding.