PACKAGE IT UP: The NL Offshore Land Lottery

Covid-19 has much the world’s oil and gas industry on hold.

When we stop moving, we stop using energy at the level we did. On top of a dramatic decrease in oil and gas consumption, oil prices have drastically declined. As a result of these two factors, oil companies and contractors have laid off employees for 12-18 months who work offshore. For many employees, suppliers and oil companies, work is on hold for months and months. It is rough times. So now what?

Offshore Newfoundland, the industry that produced over $120 BILLION in revenue and nearly $50 BILLION in investments over the last three decades. And yet, our saving grace, our prominent employer, our foundation and security are evaporating right before our eyes. We better make some bold moves fast.

Isolation can teach us a lot. A Vietnam war veteran, who was held in captivity for decades, said, “I learned quickly that the restriction I felt while living in captivity, was not isolation; it was the limits of my mind. That’s how I survived. People who didn’t survive didn’t understand that.”

During this Covid-19 isolation time, his sentiments have stuck with me. If we are going to survive we better get out of isolation and into a mindset of possibility and opportunity.

I believe radical times call for extreme action, and this time is one of massive opportunity if we embrace it. I’m not talking about a slightly different version of the offshore industry. I’m not talking about waiting for the oil price market to recover. I’m not talking about hoping Covid-19 will go away. No, none of that is going to give us the offshore industry we deserve, let alone make it a stronger-than-ever version of itself. I’m talking about making an offshore market with radical changes in the system.

Just like any product or service we need to package it up and present it in such a way that people can’t resist it. We need to make a market.

Here’s one strategy that could work.

The Newfoundland Offshore Land Lottery.

We have over 650 PROVEN oil prospects offshore Newfoundland. Each prospect is identified as oil potential. History has proven that our seismic offshore Newfoundland yields good results. Each prospect offshore has the potential to be the next significant oil discovery. What if we gave away 20 or our 650+ land prospects to 20 lucky lotto winners?

In other words, 20 opportunities would become available to existing oil companies in the region and also to any other qualified global company who wanted to drill for oil offshore Newfoundland. Not only would it put all eyes on this province as a hot-bed to invest, but it would spud an oil bonanza!

Taking it even further, what if Canada became majority share holders in its oil projects as Norway did. Would that provide us with the possibility of a robust industry and owners ultimately financial gains that lead to the largest trust fund in the world, just like Norway? I believe the answer to that, is yes.

If we were smart, we would do this we would have oil finds. With oil discoveries, we could follow Norway and rather than spending all the revenue from oil discoveries, we could re-invest it so that things don’t get overinflated in the short-term, and we have a nest egg in the long term. A trust fund that keeps us debt-free and secures the future is precisely the goal to go after.

ENVISION IT:
The land lottery would go something like this:

OIL COMPANIES: ENTER TO WIN A PACKAGE DEAL OF OPPORTUNITY, OFFSHORE NEWFOUNDLAND

20 oil companies will become lotto winners of highly lucrative land offshore Newfoundland. They pick their land parcel. This land lotto is your once-in-a-lifetime opportunity to drill and discover oil, while the rest of the world is on hold. As a lucrative land winner you will have 7 global advantages:

Newfoundland is virtually Covid virus-free, which means with the right Covid-19 back-to-work protocols in place, the oil company could be drilling for oil here within the next 12 months. Utilizing the existing workforce, workers will not have to be brought in from other regions, keeping everyone safer.
Right now, as a lottery winner, there is a ONE TIME ONLY opportunity to get your offshore land parcel of their choice, saving the oil company millions upon millions of dollars as the project must be approved in a super-fast time frame for drilling and have partnership options with the province and Canada.
Through our land survey system, our land has been identified as a qualified lead for oil discovery. That means the oil company has an identified prospect for oil recovery and may strike oil. The chances are at least one in ten. The seismic is showing incredibly good results. This is proven to be the case as Equinor just discovered two deepwater plays. (Nov. 2020)
The Canadian federal government would have to guarantee 20 land lottery winners environmental approvals within 90 days, which means drilling plays are up and running in record time.
We have a stable government and country with strong leadership.
We have an established oil industry that is ready to support oil companies drilling.
Canada will partner with the oil companies offering tax incentives, operational and procedural expedition, and elevate the chances of success. Cutting taxes for the offshore oil and gas industry will reduce costs and stimulate investment in the sector. A one year tax holiday during the lottery would be ideal.
To be eligible the oil companies would have to commit to drilling within the 12 months of winning the offshore land lottery.

Being The Obvious Choice

For most oil and gas companies that are looking to get back on track with oil drilling, this option would be an obvious choice above ALL OTHER GLOBAL OPTIONS because of the cumulative benefits to get in the game.

Oil companies would be thinking, “Offshore Newfoundland, free open drilling, proven oil reserves, exceptional seismic, guaranteed environmental approval timelines, and one of the healthiest places in the world to operate, as far as Covid-19 is concerned, and a strong partner in Canada as an equity stakeholder. I like it!”

For Newfoundland and Canada the lottery would be a gold mine. 20 companies would drill offshore Newfoundland all within a year. Think about the level of business that would happen with 20 drilling plays happening here, simultaneously. Billions in expenditures would start to flow into the country.

The more we drill the more we will find oil. It is that simple. The chances of finding oil in a land lottery are incredibly high. So while the oil industry around the globe is virtually on hold, Offshore Newfoundland could overtake places like Guyana and could then positioned to become the next North Sea. It’s a win-win for all.

Now I don’t know about you, but I believe this is a really smart thing to do because:

A land lottery would work.
A land lottery would set our oil industry up to be the most lucrative resource rich place in the world.
A land lottery would be the most progressive play we have ever experienced in this province and indeed Canada.
It would mean royalties for Newfoundland and Canada for decades to come.
It would mean unprecedented numbers of jobs.
It would mean a dynamic and booming supply base and the provincial economy overall.
It’s a solution to the most challenging time the world has known. In this lottery scenario, 20 companies win, so that everyone wins!

You have to ask yourself, are we going to keep ourselves in the constraints of business in the past?
Are we going to sit there and tweak this or that to create marginal gains? Are we going to play the safe card not believing we deserve to prosper?
Or are we going to blow the doors off of er?

The Land Lottery is the play. There is no time to hesitate. It would have to packaged right, delivered with alacrity and Canada would have to collaborate. We would have to act with precision. And most of all we have and remove our man-made-limitations,

Canada and Newfoundland need to get into equity positions in these projects. They need to put the money where the mouth is because if we don’t believe in our resources, who will?

Some would argue it’s too risky but this is not a Muskrat Falls level of risk. We have 30 years of history of proven oil and proven finds. We have Norway to see what’s possible. We have proven infrastructure to support our investment of taxpayers money. We understand that oil is the number one commodity on the planet and its demand rises as we progress. We know oil and gas are not going anywhere for the next 40 years. We know that oil and gas is THE KEY to bringing in renewables. We aren’t getting there without it.

This is a no brainer.

Long May Your Big Jib Draw!

Source & Graphics: Government of Newfoundland and Labrador

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For further discussions on the solutions
and vision for Newfoundland’s Offshore
oil industry please contact the author:
Ms. Tina Olivero:
Tinaolivero@theogm.com
709 770 0677