(Canada)- Nova Scotia's premier John Hamm announced an agreement with the federal government in Ottawa to change and modernize regulations on flow testing. Elimination of this costly drilling regulation is an attempt to revive interest in the province's lagging offshore oil and gas sector.
Flow testing has been a regulatory requirement for drilling operators, and is designed to yield geological information to the industry and government regulators. Hamm said the goal in streamlining the process is to ensure that government's actions "don't create artificial barriers to getting the drilling done."
The artificial barriers include a hefty price tag. Entry fees for drilling companies to get ready for a test are typically $10 million, followed by an additional fee of $4 million should another test be necessary.
This announcement was met with praise by members of the E&P community. The move should allow companies such as EnCana Corp. to proceed more quickly on offshore projects such as the Deep Panuke natural gas field, located 250 km southeast of Halifax.
EnCana had drilled two exploration wells in the area previously that found natural gas rates at production levels much lower than anticipated. With the removal of the flow testing mandate, EnCana now plans to go ahead with another exploratory well northeast of the Deep Panuke field sometime in November.