A licence to explore the offshore of Nova Scotia for oil and gas and restart fossil fuel activity there after years of dormancy was rejected Monday by the federal and provincial governments.

In a joint statement, Jonathan Wilkinson, federal natural resources minister, and Tory Rushton, Nova Scotia’s minister of natural resources and renewables, announced their decision to reject the $1.5-million bid from Inceptio Limited, a Scotland-based company. The two ministers said their decision considered the transition to clean energy.

In early November, the two levels of government announced a hold on the pending oil and gas exploration licence, which was the only successful bid by a company to explore the offshore of the province. The Canada-Nova Scotia Offshore Petroleum Board announced its sole successful bid the month prior.

Wilkinson and Rushton wrote that they “recognize the expertise of the board and want to reiterate our confidence in the regulatory process that it undertook.”

The decision to reject the licence considers broader policy focused on “shared commitments to advance clean energy and pursue economic opportunities in the clean energy sector, which are beyond the scope of the board's regulatory purview,” the joint statement said.

“This decision will enable us to research and understand the interactions between the two industries as we transition to our clean energy future.”

Environmental and community groups immediately celebrated the decision. The bid from Inceptio Limited was for exploration of an area on the Scotian Shelf. The bid is approximately 119,803 hectares in size, an area which could fit on the Halifax Peninsula about 63 times. The area neighbours Sable Island, which is 290 kilometres southeast of Halifax and is known for its unique wild horse population and breadth of biodiversity. In 2018, exploration bids around the island faced harsh criticism and a successful bid was ultimately abandoned.

“We were very concerned about the impact of seismic blasting and drilling on marine life, particularly on northern bottlenose whales in the Gully,” said Gretchen Fitzgerald, national program director with Sierra Club Canada Foundation. “We’re so relieved this licence has been dropped and we can get on with urgently needed climate solutions, such as offshore wind.”

The Sierra Club is part of the Nova Scotia Offshore Alliance, which has been calling for a moratorium on oil and gas activity in the province since 2016. The group said the governments’ rejection of the exploration licence paves the way for a moratorium.

A licence to explore the offshore of Nova Scotia for oil and gas — which would have restarted fossil fuel activity in the offshore after years of dormancy — has been rejected by the federal and provincial governments.

In November, Wilkinson told Canada’s National Observer that the hold on the licence decision was necessary to engage with stakeholders and understand their environmental concerns.

The decision to veto the licence comes during the annual United Nations climate change negotiations in Dubai, where countries including Canada are gathered to set international climate targets.

Angela Carter, energy transition specialist at the International Institute for Sustainable Development (IISD), speaking from COP28, said the decision to reject the licence is “embodying the science,” which shows there should be “no new development, no new licences, no new exploration.”

The licence decision fits into a larger trend in Atlantic Canada, explained Carter. While Newfoundland and Labrador intends to double offshore oil production by 2030, there have been multiple setbacks in recent months.

In June, BP announced it was abandoning a high-profile exploratory oil well, which was poised to be a multibillion-barrel deposit. The abandonment came on the heels of the postponement of Bay du Nord — Canada’s first deepwater offshore oil project. In May, project owner Equinor said Bay du Nord would be put on hold for three years, partially blaming increased costs in the oil market. However, the company maintains it plans to pivot strategies.

Most recently, a call for exploration bids in Newfoundland and Labrador received no bids, contrasting with 2022 when over $238 million of exploration licences were awarded by the provincial-federal regulator.

Exploring for oil offshore is expensive, explained Carter, and there is a significant lag time between getting an exploration licence and project completion.

“The closer and closer we get to 2030 … the closer we're getting to a point where the high-cost producers are going to be squeezed out. Newfoundland and Labrador are high-cost producers: offshore, harsh North Atlantic environment,” she said.

“So you gather up all that evidence, and you align it with what the science is saying and the future of Newfoundland and Labrador’s oil industry doesn't look good.”

With files from John Woodside

Keep reading

Hallelujah! Minister Wilkinson has finally rejected an oil exploration license. Better late than never I guess.

Out of the challenges working against offshore oil exploration, which includes a lack of widespread local acceptance and hard-nosed ecological science, the one not really discussed much openly is long term economic viability.

Though Wilkinson may be paying more attention to the short-term political ramifications of oil exploration in a province that produced recent reactionary flagellation on a local carbon tax carveout, the exploration companies are likely huddling in boardrooms murmuring about nadequate returns on steep investments and finding offshore is a really steep mountain to climb to produce oil at an affordable price point.

The eastern Maritimes could be a continental-scale clean energy powerhouse if attention equal to oil exploration and extraction was concentrated on wind power, storage and transmission. Once abundant low emission electricity is in place, another political effort could be expended to bring green industry to Canada's three largest East Coast provinces.

These would be two major steps toward decarbonising the national economy and more appropriately meeting our climate obligations.