$130M pegged for new oil exploration off Newfoundland

Four oil companies have pledged to spend almost $130 million to look for new sources of oil off Newfoundland's east coast.

The Canada-Newfoundland and Labrador Offshore Petroleum Board announced successful bids on five separate areas.

By far, the most significant bid is a partnership between Petro-Canada and Statoil Hydro Canada Ltd., which has pledged to spend $81.9 million over the next five years on a 19,430-hectare parcel, west of the existing White Rose oilfield.

That bid concerns an area in the Jeanne d'Arc Basin, the site of all three fields currently in production off Newfoundland.

An additional bid involving Husky Oil and partner Repsol Exploracion SA, and worth almost $9.5 million is also based in the Jeanne d'Arc Basin.

Three other bids, though, will see crews looking in a largely unexplored area known as the Flemish Pass.

Government and industry officials have both said exploration is critical for maintaining Newfoundland and Labrador offshore oil industry, which has become a dominant force in the provincial economy.

Production at three fields has already peaked, and although a deal has been reached on a fourth field, Hebron, production is not scheduled to start until 2017, following a five-year construction period.

Despite the global economic upheaval of the last two months, the bids, which closed Friday, show a sense of confidence in oil exploration. They come on the heels of bids worth $186 million that were registered in September for work off the coast of Labrador the first time in 25 years that oil companies had ventured that far north to search for petroleum.