Chinese oil company announces delay of Flemish Pass drilling campaign

In another blow to Newfoundland and Labrador's offshore oil industry, an exploration drilling campaign planned this year for the Flemish Pass has been delayed because of the global pandemic.

That's a setback for an industry hoping to expand the province's oil industry into a new, deepwater basin.

In a statement to CBC News, CNOOC International confirmed that plans to drillwhat's known as the Pelles well has been delayed.

"We have concluded that given that we are in the early stages of our exploration program, we cannot safely execute offshore in Atlantic Canada in the near term due to the COVID-19 pandemic," the statement reads.

Spain battling a severe outbreak

The COVID-19 crisis in Europe is a big factor in the decision.

That's because the drill ship Stena IceMax is in Spain, and it cannot sail for Newfoundland, said Natural Resources Minister Siobhan Coady.

"It would have to come across the ocean into Newfoundland and Labrador waters and that is not permissible at the time because of the COVID situation," said Coady.

The IceMax recently underwent a workover in a Spanish shipyard, and wasscheduled to start drilling the Pelles A-71 location in early April.

But Spain is battling a severe outbreak of COVID-19, with hundreds of its citizens dying daily.

The IceMax is also crewed by an international contingent of specialists, and sailing into Canadian waters during a pandemic is not a good idea, said Coady.

So the three wildcat wells planned for this year at a reported day rate of $299,000 are now on hold but CNOOC saysit remains committed to the campaign, and this is a delay.

Coady says she believes the current wave of bad news will soon end.

"I guess I'm cautiously optimistic that once we are through this pandemic, things will come back and surge again," she said.

Bay du Nordnot dead, says Coady

The decision follows a similar move by Equinor and its partners to defer the Bay du Nordproject, also located in the Flemish Pass.

Equinor cited plummeting oil prices in its decision, butCoady is also confident that it will eventually get the green light.

"They still have their project team together, and arestill working to advance it," she said.

• Near-record investment expected as 'bow wave' of activity heads for Newfoundland offshore

Meanwhile, two other drilling campaigns are either underway, or are about to begin.

Coady said ExxonMobil is continuing its drilling work, whileshe's confident Equinor will proceed with its own campaign, with a drill rig anchored in Bay Bulls.

CNOOC which stands for China National Offshore Oil Corporation did not reference challenging market conditions in its statement, and CBC has requested more information from the company.

• Chinese oil company gets go-ahead for exploration drilling in Flemish Pass Basin

"Like all organizations, we continue to respond to the evolving COVID-19 crisis. Maintaining the safety and well-being of our workforce remains our top priority," CNOOCwrote.

The company called the decision to delay its drilling campaign "difficult but necessary."

• Bay du Nord project deferred as oil prices plummet

However, the company said it remains "fully committed to Newfoundland and Labrador."

"We continue to assess appropriate timing and next steps to safely execute our exploration program in the Flemish Pass," reads the statement.

CNOOCis one of the largest national oil companies in China.

The Stena IceMax drill ship contracted to carry out its drilling campaign has never operated in Newfoundland's offshore, but has worked for Shell Canada in Nova Scotia's offshore.

CBC has learned that workers began receiving messages early this morning, saying the exploration campaign was being postponed.

"CNOOC had mobilized people from all over the world for this project and now they are at a standstill," said a source close to the project.

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